Analysis Of The Impact Of FDI On Industrial Structure Optimization In Shandong Province

For a long time,Shandong Province has always been in an advantageous position in regional economic development.With regional and resource advantage,the scale and quality of foreign direct investment both have been better developed.But in recent years,because of the backward industrial structure,lacking in development vitality and low economic benefits Shandong Province has lost the advantageous position in regional economic development.And the difference with some provinces is getting wider.The gap of economic aggregate between Shandong Province and Guangdong Province has expanded from 586 billion in 2008 to 1.72 trillion and from 5 billion to 1.32 trillion between Shandong Province and Jiangsu Province.The per capita disposable income gap between urban and rural residents is getting wider.On February 22,2018,Shandong Provincial Party Committee Secretary Liu Jiayi delivered a speech at a government meeting,pointing out the pain points of economic development in Shandong Province in recent years,and explicitly proposed to change the mode of economic development,accelerate the conversion of old and new kinetic energy,and promote the optimization of industrial structure.To realize the requirements of high quality development in Shandong Province.According to the correlation analysis about industrial restructuring and foreign direct investment,foreign direct investment can promote industrial structure upgrade and promote healthy and sustainable economic growth.In terms of fixed investment,saving constraints foreign exchange constrains and absorptive capacity constraints are the three constraints on economic development.In terms of technological innovation,FDI as an international flow of a basket of production factors has also brought advanced technical support to the host country.Through the corporate linkage effect,the company will strive to improve the product quality and production of its products for sales demand.Through the demonstration effect of technology,the host country's enterprises can constantly learn from the advanced production technologies of multinational corporations in order to improve their own production technologies.Through the competitive effect,the entry of multinational corporations can increase the degree of market competition in relevant industries,thereby promoting the host country enterprises to increase their own production techniques to increase their competitiveness in order to obtain limited resources.In terms of institutional adjustment,foreign direct investment will bring new corporate institution new management concepts and new resource allocation systems to the host countries.This micro-level innovation in institutional arrangements will stimulate system innovation in the entire society.At present,foreign research on FDI focuses on FDI accelerating the host country's economic growth through capital accumulation and technological progress in the host country and domestic researches on foreign direct investment and industrial restructuring are mostly concentrated on the national level,and different scholars hold different attitudes about whether FDI will promote the upgrading of regional industrial structure.Therefore,this article attempts to analyze the relationship between foreign direct investment in Shandong Province and the optimization and upgrading of industrial structure from the perspective of Shandong Province,and try to find out whether foreign direct investment in Shandong Province will promote the upgrading and optimization of the industrial structure in Shandong Province.This article first sorts out relevant theories and researches on the relationship between FDI and industrial restructuring.Second,it analyzes the development of foreign direct investment in Shandong Province and its distribution among regions and industries.Turns out that since 1984,the actual amount of foreign direct investment in Shandong has increased substantially every year,but its distribution across the provinces has been uneven.Only Qingdao City and Yantai City have absorbed more than 50%of foreign direct investment in Shandong Province.Besides,the majority of foreign direct investment in Shandong Province has flowed into the secondary industry,especially manufacturing,and its share in the primary industry has decreased year by year but has increased year by year in the tertiary industry.Then through the analysis of the current industrial structure of Shandong Province in terms of the economic output and the number of employment,it was found that the industrial structure of Shandong Province has gradually transitioned from the "second first third" model to the "third second first" model,and the industrial structure has continued upgrading.Then take advantage of industrial structure deviation degree to construct the index of industrial structure rationalization level to confirm that the level of industrial structure rationalization in Shandong Province is improving,namely,the industrial structure of Shandong Province is also continuously optimized.But at the same time,it also proved that the pace of upgrading and optimizing the industrial structure in Shandong Province has fallen behind the national level.In the next section,this article selects the related series of foreign direct investment,industry economic output and employment of three industries from 1984 to 2016 to construct an index of industrial structure heightening and an index of rationalization of the industrial structure.Then do sequence succession test,Johansen cointegration test and construct a vector error correction model(VEC),impulse response function and variance decomposition to study the impact of foreign direct investment on industrial structure in Shandong Province.It is concluded that foreign direct investment in Shandong Province has a positive effect on the process of industrial structure heightening and rationalization,and that the obvious long-term impetus to the heightening and rationalization of industrial structure is better than short-term.And the adjustment of the industrial structure heightening from short-term,non-equilibrium to long-term is faster than the adjustment of rationalization of the industrial structure.And considers that Shandong Province's FDI has a catalytic effect on the process of the advanced industrial structure.Then use the Vector Error Correction Model(VEC)to study the relationship between foreign direct investment in Shandong Province and the rationalization of the industrial structure.It was concluded that foreign direct investment in Shandong Province has a positive effect on the industrial structure optimization process.Finally,based on the current status of Shandong Province's industrial structure and foreign direct investment,as well as empirical results,this paper believes that Shandong Province should continue to expand the scale of foreign direct investment.Coastal regions should continue to exert regional advantages while inland areas should improve their own investment policies and foundations.We must also improve the situation in which foreign direct investment is unevenly distributed among industries and take advantage of the linkage between industries to maximize the economic benefits of foreign direct investment.Finally,we must also focus on improving the quality of the workforce and improve policies to attract high-quality talent.