Research On The Impact Of Free Trade Zone On Foreign Direct Investment

Against the backdrop of rising international investment protectionism and the spread of COVID-19,pilot free trade zones have accelerated their efforts to explore ways and means of high-level opening-up,high-quality economic development and high-end factors of production,giving full play to their role as pacers of reform and opening-up and injecting lasting impetus into China’s economic development.The establishment of pilot free trade zones is an important strategic measure taken by the central Committee of the Chinese Communist party and The State Council to promote reform and opening-up.Since 2013,21 pilot free trade zones have been set up in six batches,from coastal areas to inland areas,and from pilot free trade zones to pilot free trade ports,forming a new pattern of all-round opening-up.In 2021,the 21 pilot free trade zones accounted for 18.5 percent of China’s foreign investment,accounting for less than 4‰ of the country’s land area①,making important contributions to stabilizing foreign investment.Since its construction,the Pilot Free Trade Zone has insisted on system innovation as the core and holds the principle boldly breaking through,boldly testing,and independently changing.It implements the "pre-entry national treatment+negative list" management model for foreign direct investment,and continuously reduces the content of the negative list,in accordance with the"just do whatever the law doesn’t prohibit" management in order to promote the pilot free trade zone to better attract foreign investment;at the same time,it implements of "access more government services via a single website""identification and photo separation," and streamlines the system of business oversight during and after business operations.Besides those,it accelerates industrial agglomeration in pilot free trade zones and forms an effective market system in order to promote the inflow of foreign direct investment.In order to scientifically verify whether the pilot free trade zones accelerate the attraction of foreign direct investment,this paper selected the first three batches of mature pilot free trade zones as the research object to deeply explore the impact of pilot free trade zones on foreign direct investment.This paper reviews the existing literature on the pilot free trade zone,and concludes that the pilot free trade zone has capital flow effect,industrial agglomeration effect and financial innovation driving effect in attracting foreign direct investment.According to the influencing mechanism,control variables are selected and the multi-period differential model and moderating effect model are used to empirically test the influence of pilot free trade zones on foreign direct investment.The results show that:first,the construction of pilot free trade zones has a significant positive effect on attracting foreign direct investment;Second,the level of government support and investment intensity can strengthen the pilot free trade zone to promote the introduction of foreign direct investment;Third,there is heterogeneity in attracting foreign direct investment in different batches and different geographical locations of the pilot free trade zones.The policy dividend effect of the third batch of pilot free trade zones is more obvious,and the coastal pilot free trade zones attract foreign direct investment better than the inland pilot free trade zones.Based on the analysis of the empirical results,this paper further proposes to strengthen the effect of the pilot free trade zone on attracting foreign direct investment from the aspects of strengthening institutional innovation,continuously optimizing the business environment,promoting differentiated reform,optimizing industrial layout and developing digital trade,so as to effectively play the role of resource aggregation in the pilot free trade zone.