Research On The Influence Of Institutional Environment And Foreign Direct Investment On The Process Of Urbanization In China

Since the Economic Reform and open up,the level of China's opening-up has been continuously improved,foreign trade has been developing rapidly,and foreign direct investment has poured in a large number,continuously providing external impetus for China's economic development.According to statistics: In 1978,China's total foreign direct investment was only US $320 million.In 2018,it increased to US $134.97 billion,with an annual growth rate of 117.42%.The total amount of foreign investment utilization is second only to that of the United States,rising to the second place in the world.At the same time,China's urbanization has entered an accelerated stage.In 1978,China's urbanization level was only 17.92%,and in 2018,it rose to 59.58%.Is there a positive relationship between FDI and the level of urbanization in China? What kind of mechanism does FDI play in the process of urbanization in China? It has become the focus of academic research.In addition,institutional environment,as an important external constraint of many social and economic activities,its difference is bound to have a significant impact on micro economic activities.Therefore,in order to study the influence of foreign direct investment on the process of urbanization in China,and the difference of the relationship between foreign direct investment and urbanization in different nature,and further study the regulatory role of institutional factors(including legal system and administrative system)in the relationship between foreign direct investment and urbanization,this paper is based on the theory of foreign trade and China's unique institutional environment,in the analysis of the impact of foreign direct investment on China's urbanization process mechanism and the corresponding mathematical model based on the construction of research framework.Based on the large sample data,using a series of statistical and advanced econometric methods,such as panel fixed effect model,tool variable two-stage least square method(2SLS),quantile regression method,feasible generalized least square method(FGLS),spatial econometric method,etc.,to solve the problems of missing variables,endogenous problems and heteroscedasticity,to explore the characteristics of urbanization stages and whether there is spatial autocorrelation.The main conclusions of this paper are as follows:First,FDI can significantly promote the process of urbanization in China through capital accumulation,technology spillover,industrial agglomeration,industrial structure upgrading and employment expansion,and the role of FDI in promoting the process of urbanization in China increases with the improvement of urbanization level.According to the difference of entry mode,FDI is divided into foreign joint ventures and wholly foreign owned enterprises,The effect of wholly foreign owned enterprises on urbanization is stronger than that of foreign joint ventures;According to the differences of sources,FDI is divided into Hong Kong,Macao and Taiwan investment and other FDI,and other foreign direct investment plays astronger role in promoting the urbanization process than Hong Kong,Macao and Taiwan investment.According to the differences of source areas,other foreign direct investment plays a stronger role in promoting the urbanization process than Hong Kong,Macao and Taiwan investment.In this chapter,first of all,the missing variables are solved by panel fixed effect model,which makes the regression results more reliable;further,quantile regression method is adopted,and the regression results reflect the stage characteristics in the process of urbanization development in China in a more detailed way;Finally,using the spatial measurement method,it is concluded that the development of urbanization in China has significant spatial autocorrelation characteristics.Second,the improvement of the legal system can attract the rural population to enter the city and promote the urbanization process by promoting the reform of the land transfer system,household registration system and social security system;promote the effective operation of the market and the urbanization process by reducing the transaction cost,ensuring cooperation and competition,and establishing incentive mechanism.At the same time,the perfect legal system reduces the scale of foreign investment and the technology spillover effect of foreign investment by reducing government intervention,strengthening environmental regulation and intellectual property protection,thus weakening the role of foreign direct investment in the process of urbanization in China.In this chapter,we use panel fixed effect model,two-stage least square method(2SLS)for instrumental variables and feasible generalized least square method(FGLS)to solve the problem of missing variables,endogeneity and heteroscedasticity in turn,so that the regression results are constantly optimized.Thirdly,local administrative monopoly is easy to lead to over construction of cities,rent-seeking of government power,unfairness of market competition and distortion of resource allocation,which hinders the healthy and orderly development of urbanization;At the same time,the local investment led by the government is likely to cause unfair competition in the market,increase the cost of investment,increase the local environmental pressure,and weaken the role of foreign direct investment in promoting the local urbanization process.In this chapter,we still use panel fixed effect model,two-stage least square method(2SLS)of instrumental variables and feasible generalized least square method(FGLS)to solve the problems of missing variables,endogeneity and heteroscedasticity,in order to get more scientific and reliable regression results.