Empirical Analysis Of The Impact Of FDI On Urbanization In China

In August 2019,the National Bureau of statistics issued a series of reports on the achievements of economic and social development in the founding of new China,which put forward that in the past 70 years since the founding of new China,China has gone through the urbanization process with the largest population,the largest scale and the fastest growth speed in the history of the world.By the end of 2018,China's urbanization rate according to the path of permanent population reached 59.58%,which was 48.94 percentage points higher than that of 10.64%at the end of 1949.Of course,the development of cities and towns is the result of many factors such as social environment,economy,culture and so on.It is not promoted in a closed environment.Under the background of economic globalization,China has been affected by foreign investment in economic development and cultural awareness.Therefore,the development of urbanization will also be affected by both internal and external factors,and gradually show the characteristics of globalization and openness caused by this impact.This paper is mainly divided into five sections:The first section is the introduction,which introduces the background and significance of the research.The second section analyses the direct and indirect mechanism of FDI influencing urbanization,such as FDI influencing urbanization directly by providing financial support or indirectly by promoting industrial agglomeration.The third section introduces in detail the actual utilization of FDI and the development of urbanization since the founding of new China.Based on the theoretical analysis,this paper makes an empirical study in the fourth section.Firstly,the spatial correlation between the explanatory variable urbanization rate and the core explanatory variables is tested by the global Moran index and Geary 'C index.The spatial econometric model is selected on the premise of determining the positive spatial correlation of the sample data.Then,the spatial error model is established by using the inter-provincial panel data from 1998 to 2017.Finally,the robustness of the econometric model is tested by using the substitution variables and the substitution weight matrix to ensure the stability of the original empirical results.The fifth section is the main conclusion of this paper.Firstly,according to theoretical analysis,FDI influences the process of urbanization through two ways:direct role(providing financial support)and indirect role(optimizing industrial structure,accelerating infrastructure construction,etc.).Secondly,according to the empirical analysis of direct and indirect impacts,the impact coefficient of FDI on China's urbanization is 0.0781,which indicates that FDI inflow directly promoted China's urbanization process from 1 to 2017;The control variable industrial structure level has a high(1.2159)promoting on China's urbanization level,the per capita grain output has a negative impact on China's urbanization(-0.156),the infrastructure construction has a positive impact on China's urbanization rate(0.0962),and reasonable government investment helps to promote urbanization.Finally,according to the empirical results of the cross-item of explanatory variables and control variables,FDI has a positive impact on in construction.The phenomenon of industrial agglomeration caused by foreign capital inflow contributes to the development of infrastructure construction between urban and rural areas,thus gradually forming embryonic towns,indirectly affecting the development of urbanization.At the same time,the cross coefficient of FDI and industrial structure is positive,which proves that FDI inflow will increase the proportion of secondary tertiary industries in GDP,adjust the industrial structure of our country,affect the employment structure and population migration,and indirectly affect the development of urbanization in our country.Therefore,according to the actual situation,China should introduce and rationally use foreign direct investment to give full play to the role of"external factors" in the development of urbanization.The spatial autoregressive coefficient of the error term is significantly negative,which indicates that the urbanization rate of the provinces in China will be significantly affected by the urbanization process of the surrounding provinces and the unknown factors related to the urbanization of the neighboring provinces,that is,the spatial spillover effect exists in the urbanization development of the provinces in China and to some extent inhibits the urbanization of the neighboring provinces,which can be achieved through the inter-regional approach.Population migration is explained by the fact that regions and provinces with high level of economic and urbanization development have more attraction for talents.In addition to the influence of developed transportation and perfect infrastructure,population will migrate to the surrounding provinces.Therefore,the urbanization development of a province will affect the urbanization process of its surrounding provinces,that is,there is a spatial spillover effect.Therefore,while promoting their own urbanization process,provinces in China should also consider the impact of surrounding areas.Finally,according to the main conclusions,this paper puts forward the following policy recommendations:actively guide foreign investment to high-tech industries,promote the optimization of urban industrial structure;guide foreign investment to the east,central and western regions rationally,promote the balanced development of urbanization;at the same time,make rational use of internal and external factors in urbanization development.We should adhere to the concept of human-centered development and take the road of quality development.