Research On The Impact Of Industrial Agglomeration On China’s Foreign Direct Investment

With the continuous advancement of opening up,China has shown an active leading role in the development of the world economy.At present,foreign direct investment has become an important mode for China to participate in global economic competition and cooperation.Industrial agglomeration,as a spatial economic feature of production activities,can optimize the spatial layout of productivity through the aggregation of factors,which characterizes a country’s industrial development advantages.With the transformation of China’s industrial development to a high-quality stage,industrial agglomeration is showing a trend of vigorous development.Chinese enterprises actively carry out foreign direct investment.Enterprises not only adapt to the development of localized industrial clusters,but also integrate into the world production system.It can be found that China’s foreign direct investment is consistent with the development status of industrial agglomeration,and the agglomeration effect has a profound impact on the integration of Chinese industries into economic globalization.Facing the complicated global economic development environment,improving the development level of China’s foreign direct investment will help to better utilize the advantages of the "domestic and international" markets and achieve high-quality economic development.As an important development feature of today’s industry,how to make use of the advantages of industrial agglomeration,participate in the division of global value activities and economic and trade cooperation are important topics worthy of discussion.This article aims to coordinate industrial development and foreign direct investment,and provide a certain theoretical basis for promoting the high-quality development of foreign investment cooperation.Therefore,this paper selects the industrial development data from 2004 to 2018 to estimate the agglomeration level of different industries in China,examines the relevant factors that affect the scale of China’s foreign direct investment,and further analyzes the relationship between industrial agglomeration and its external economic effects and the development of foreign investment.Firstly,measure the level of industrial agglomeration in China,sort out and analyze the development status of industrial agglomeration and foreign direct investment.Then build a measurement model based on theoretical analysis to carry out relevant empirical analysis,explore the effect and mechanism of industrial agglomeration,and put forward relevant policy recommendations.Empirical studies have shown that industrial agglomeration has significantly promoted my country’s foreign direct investment,and the conclusions remain sound after controlling endogenous issues.Considering the heterogeneity of industries,the secondary and tertiary industries with high factor intensiveness are important driving forces for my country’s foreign direct investment.Considering the "scale effect" and "crowding effect" existing in the level of agglomeration development,the study found that the impact of industrial agglomeration on my country’s foreign direct investment has a non-linear agglomeration development threshold effect.The impact mechanism test shows that the “positive externality” of the knowledge and technology spillover effect released by the agglomeration,the favorable intermediate product sharing platform and the labor reservoir has effectively improved industrial productivity and enhanced the international competitiveness of my country’s industries.Production costs reversely promote the development of foreign direct investment.Finally,relevant countermeasures and suggestions are put forward on the development of industrial agglomeration and foreign direct investment.