The Impact Of Capital Distortion On China's Foreign Direct Investment Level

Due to the high level of marketization of factors in developed countries and their rich experience in outward foreign direct investment,their outward foreign direct investment behavior is less affected by factor distortion.However,the current Chinese economy is in a period of transition,the development of factor markets lags significantly behind the product market,and the distortion of factor markets still exists.Taking the capital market as an example,although a series of reform measures that have been experienced have achieved certain results,compared with developed economies,China's capital market is still imperfect,and capital distortions still exist,which has also caused unreasonable capital allocation and reduced utilization efficiency.This contradicts the current phenomenon that the scale of China's outward foreign direct investment has risen rapidly,and a large number of enterprises,especially private capital,have gone abroad.The efficiency support and competitive advantage behind it are getting more and more attention from scholars.Based on the existing research,this paper incorporates the problem of capital distortion into the analysis framework of outward foreign direct investment,and theoretically clarifies the path of capital distortion on China's outward foreign direct investment.On the one hand,capital distortions,while causing the cost burden of enterprises,also force enterprises to increase their own productivity levels,thereby producing the effect of enhancing its outward foreign direct investment.On the other hand,capital distortion hinders the optimal allocation of capital factors,which has adversely affected the growth of overall social productivity and the sustainable development of outward foreign direct investment.Focusing on the above mechanism,this paper uses the production function method to measure the capital distortion and productivity indicators based on the data of provinces and sectors in China.On the basis of fact analysis,the econometric model is used to empirically test the internal relationship between the two,and further tests are carried out in combination with regional and industry differences.The results show that capital distortions significantly inhibit the development of China's outward FDI;capital distortions put forward higher requirements for productivity,which has a positive impact on China's enterprises' outward FDI through productivity;capital distortions inhibit the growth of overall productivity,which has a negative impact on the transformation of the mode ofeconomic growth and the sustainable development of outward FDI.The above results show that alleviating capital distortions and improving productivity level are of great significance for promoting the development of China's outward foreign direct investment level,and the policy suggestions for building a good capital market environment and encouraging technological innovation have more long-term significance for the development of China's outward foreign direct investment.