Research On The Impact Of Domestic Segmentation On China's Outward Direct Investment

With the development of an open economic system,China's foreign direct investment has developed rapidly,and it has become one of the world's largest investment countries.In response to the rapid development of foreign direct investment,a lot of researches have been carried out in the academia and rich research results achieved.With regard to the factors affecting foreign direct investment,related research has conducted a comprehensive analysis from the three aspects of the investment home country,the host country,and the enterprise itself,few studies have been done from the perspective of the domestic market segmentation of the country.Market segmentation is a special phenomenon existing in the period of China's economic transition whose impact on China's economic activities has been demonstrated and tested at the theoretical and practical levels.Then,does its existence has an impact on OFDI?How does this effect occur? And what kind of impact does it have ? In the current background of building an open economic system for the coordinated development of regional economies,the study on this issue is of great significance.Based on the foreign direct investment theories and related research literatures,this paper explores whether market segmentation affects foreign direct investment and what its mechanism.This article first adopts the price method to measure market segmentation indexes across China since 2004.The author found that regardless of the country,region,or province,market segmentation has shown a steady decline,which indicates that China's domestic market is becoming more and more integrated.development trend.Then,combining the theory of foreign direct investment with the Heterogeneous Enterprise Trade Theory,analyzing the impact mechanism of market segmentation on OFDI from a theoretical level,it is found that market segmentation affects OFDI by affecting productivity,and specifically impacts from three channels:resource mismatch,hindering technological progress,and limiting market expansion.Then based on the existing theoretical analysis,this paper uses panel data from 2004 to2017 and fixed effect model to conduct relevant empirical tests,and draws the following conclusions: First,from a national perspective,market segmentation has a significant negative impact on OFDI,Second,for different regions,market segmentation negative impact on regions with high levels of economic development is more significant,while regions with low and medium levels of economic development have no significant impact.In the end,this paper uses the mediation effect model to verify the existence of the productivity mechanism,which further enriches the research of this paper.This paper also conducted robustness tests through various methods,and the results again verified the reliability and accuracy of the conclusions of this paper.This study puts market segmentation and outward foreign direct investment under the same framework for research.This paper analysis the relationship between market segmentation and outward foreign direct investment theoretically and empirically and propose relevant policy suggestions to help complement related research.