The Impact Of Financial Opening On FDI

In today’s globalized world,attracting and utilizing foreign capital is an important part of China’s basic national policy of opening up,an important part of China’s construction of an open economic system,and an important means to promote the development of national economy.Even under the situation of continuous downturn of global transnational direct investment and increasingly fierce competition for international investment,the accumulated value of China’s actual utilization of foreign investment in 2018 is as high as US $134966 million,an increase of 3.02% year on year,which continues to maintain the status of a major country in attracting foreign investment in the world.At present,China is in a critical period of industrial restructuring,transformation and upgrading.Whether financial opening will affect the absorption of foreign direct investment in China,and what kind of differential impact it will have on different regions,and how to use foreign direct investment to promote the adjustment,transformation and upgrading of China’s industrial structure are all worth studying.Therefore,in the context of expanding opening up,it is of great significance to study the impact of financial opening on foreign direct investment.First of all,this paper analyzes the specific concepts of financial opening and foreign direct investment,and studies the relevant theories of the impact of financial opening on FDI.Secondly,it analyzes the influence of financial system and financial opening on the introduction of foreign direct investment from the theoretical and practical basis,and studies the transmission mechanism of the influence of financial opening on foreign direct investment.Then,return to the actual situation of our country,expound the current situation of financial opening up since the reform and opening up,and analyze the current situation of FDI absorption in China according to different regions,and study the situation of FDI absorption in different regions under the background of financial opening up based on endogenous growth model and Pareto optimal effect.On this basis,the panel data of 31 provinces and autonomous regions in China from 2003 to 2017 are used for empirical test,and 31 provinces and autonomous regions are divided into regions to investigate the impact and transmission mechanism of financial opening on FDI in different regions of East,West and East China.The results show that the impact of financial expansion and opening-up on FDI is nonlinear.Only when the efficiency of resource allocation of intermediate variables exceeds the first threshold,can financial expansion and opening-up effectively attract FDI inflows.When the efficiency of resource allocation exceeds the second threshold,further financial expansion and opening-up will inhibit FDI,which just reflects the FDI in different regions and industries in China The phenomenon of uneven distribution and staggered competition.Finally,according to the research results,the corresponding policy recommendations are put forward.The main contribution of this paper is to study and analyze the mechanism and transmission mechanism of China’s financial opening to FDI,to study the threshold effect of financial opening to FDI with resource allocation efficiency as an intermediary transmission variable,and to provide targeted and operational policy suggestions according to the characteristics and advantages of different regions The results are more realistic.