Research On The Influence Of Two-way FDI On The Upgrading Of China's Global Value Chain

In the context of increasingly close cooperation among countries in the world,Every country participates in the international division of labor according to its own comparative advantage,so,the global value chain is formed.Most developed countries are at the high end of the value chain with advanced technology and abundant capital,While China and other developing countries can only participate in the global value chain by relying on the demographic dividend.This way of participating in the international division of labor leads to a result that China is at the low end of the value chain because of the low value added and low profit in actual exports.The report of the 19 th National Congress of the Communist Party of China once mentioned "promoting Chinese industries to move to the middle and high end of the global value chain",so China should actively explore and develop to the high end of the value chain.International investment can not only promote the flow of capital,but also the flow of people,technology and other factors of production,so as to promote economic development.According to the world investment report 2019,although global investment has generally shown a downward trend in the past three years,it has mainly occurred in developed countries.In 2018,China's IFDI and OFDI were both the second largest in the world,accounting for 10.7% and 12.8% of the global total,respectively.Therefore,China's two-way investment still has great potential.At present,most academic research focuses on the impact of IFDI or OFDI alone on the Upgrading of China's Global Value Chain and few studies examine the impact of two-way investment on it.Therefore,this paper makes an in-depth study on the impact of two-way investment on the Upgrading of China's Global Value Chain,hoping to provide some Suggestions for the upgrading of China's industrial structure.After a brief introduction of the research background and basic framework,the main contents of this paper are as follows:First,I sorted out the previous studies,summarized the global value chain promotion and measurement methods,and sorted out the contents related to the value chain promotion by IFDI,OFDI and two-way investment.Secondly,the status quo of two-way investment in China is introduced from three dimensions: overall investment,country of origin(country of inflow)and industry difference.Then it measures the level of China's global value chain and studies the development of China's global value chain from a horizo ntal and vertical perspective.At the same time,since the manufacturing and service sectors are the most in-depth industries and sectors in the global value chain in China,the level of their participation in the value chain is analyzed in detail.Thirdly,empirical research was conducted,with the GVC-position as the explained variable and IFDI,OFDI and the interaction between the two investments as the explanatory variables.At the same time,in order to make the model scientific,material capital,technological innovation level and institutional environment are added as control variables.The panel data from 31 countries over 10 years were used as a sample for a specific study.In order to draw a more detailed conclusion,this paper divides 31 countries into developed countries and developing countries and conducts a sub-sample study.And the specific situation of China is analyzed.Finally,according to the above conclusions,Suggestions are put forward for promoting the coordinated development of two-way investment and the promotion of value chain.The research of this paper shows that: First,two-way investment in China is generally stable.Both IFDI and OFDI are on the rise,and the latter is faster than the former.IFDI in China mainly comes from developed countries,while most OFDI goes to developing countries.Secondly,in recent years,the overall GVC participation index in China has little change,while the GVC-position,although showing a slow rising trend,is still relatively low.GVC participation in services and manufacturing declined slightly,while the GVC-position continued to rise.Thirdly,for the whole sample and the developed economies in sub-sample,IFDI,OFDI and two-way FDI are positively correlated with the rise of the value chain,w hich also indicates that two-way investment is coordinated and mutually reinforcing.For developing economies,OFDI cannot effectively promote their value chain,but two-way investment and IFDI can.The control variables can significantly promote the value chain in the whole sample.However,under the sub-sample,the material capital has no significant effect on the global value chain of developing economies,and the institutional environment has no significant effect on the global value chain of developed economies.Based on these conclusions,this paper proposes the following Suggestions: First,improve existing policies and optimize the development of IFDI.It is mainly divided into three aspects: improving the investment environment and simplifying the approval process;promoting high-level opening-up and providing structural guidance;improving the quality of IFDI and guarding against false IFDI.Second,strengthen OFDI and bring it into full play.This direction is also divided into three aspects,namely: improving policy support and strengthening the construction of laws and regulations;Promoting OFDI diversification and enhancing investment vitality;establishing investment cooperation institutions to promote outward direct investment.Third,guide the coordinated development of two-way investment and upgrade China's global value chain.Fourth,let multiple factors develop together to promote the value chain.This part mainly proposes Suggestions from the perspective of material capital,technological innovation level and institutional environment to push the value chain to the high end.