Outward Foreign Direct Investment And Manufacturing Upgrades In The Yangtze River Delta

The Yangtze River Delta region which serves as a model for an open economy and a leading manufacturing hub in the country has participated in the global division of factors through foreign trade and the use of foreign capital since the reform and opening up.Introducing foreign advanced production factors has promoted the improvement of manufacturing efficiency and management level in the manufacturing industry.But as the two pull the bottleneck in the manufacturing upgrade,Outward Foreign Direct Investment(OFDI)has grown rapidly after the "going out"strategy,and has become an important part of the open development of the Yangtze River Delta.This paper focuses on OFDI in the Yangtze River Delta region and studies its effects on manufacturing upgrades.This paper first analyzes the role of OFDI in the upgrading of manufacturing industry in theory with the situation of the Yangtze River Delta.The role of OFDI in the upgrading of manufacturing industry is mainly three aspects:the first is the marginal industry transfer mechanism,the second is the reverse technology spillover mechanism,and the third is the strategic resource mechanism.These three aspects have jointly improved the production efficiency of the manufacturing industry,improved the technical content,enhanced the industrial competitiveness,and promoted the manufacturing industry to a higher level.In particular,the reverse spillover effect mechanism injects technological progress from the enterprise to the industry to the region through the four modules of technology transfer,absorption,interaction and diffusion,injecting vitality into the upgrading of the manufacturing industry.Then,this paper measures the upgrading of manufacturing industry from the aspects of manufacturing competitiveness and technological progress,and selects representative indicators such as labor productivity W and total factor productivity TFP to measure the data of 25 cities in the 2007-2016 Yangtze River Delta.Empirically examine the role of OFDI in manufacturing upgrades on the basis of overall and regional differences.Among them,the Malmquist index is used to calculate the total factor productivity TFP of the manufacturing industry and is decomposed into pure technological progress TC and technical efficiency EC,focusing on the role of OFDI in technological progress of manufacturing.The empirical results show that OFDI in the Yangtze River Delta region has a positive effect on labor productivity and total factor productivity,and it also has a positive and significant effect on the pure technological progress decomposed by total factor productivity.This paper divides the Yangtze River Delta region into the core area and the peripheral area according to the economic development level.The labor productivity and the total factor productivity coefficient are both positive,but the core areas are more significant.Finally,based on the research results,this paper puts forward some policy recommendations for the Yangtze River Delta to use OFDI to promote the upgrading of manufacturing better.