The Impact Of Internet Development On The Quality Of FDI In China

Since its reform and opening up to its accession to the WTO,China has gradually developed into the country with the largest amount of global commodity trade and foreign investment.On the basis that the amount of foreign investment attracted is enough to meet the needs of China’s economic development,the Chinese government has also focused on how to improve the quality of foreign investment.At the same time,with the rise of the Internet,big data and artificial intelligence industries,China is facing new opportunities and challenges in introducing foreign investment structure optimization and improving the quality of foreign investment.Therefore,how to grasp the opportunity of change triggered by the development of the Internet and further improve the quality of foreign investment is a major issue that China needs to solve at present.With the development of the Internet,the continuous improvement of the quality of attracting foreign investment will not only help China make full use of the domestic and international markets,but also play an important role in China’s construction of a strong domestic market,enhance domestic financial stability,and establish domestic and international dual circulation.This paper mainly analyzes the impact of Internet development on FDI quality from two aspects: theory and empirical aspects.Firstly,this paper analyzes the current situation of Internet development and FDI quality in 30 provinces in China in the past14 years.Secondly,through theoretical analysis,it is found that the development of the Internet can improve the quality of FDI through the effect of reducing transaction costs,improving the quality of the system,and upgrading the industrial structure,and the development of the Internet can reduce information asymmetry and thus reduce transaction costs,and the reduction of transaction costs will increase the willingness of foreign capital to enter China to a certain extent,and then affect the quality of FDI.At the same time,the development of the Internet will also promote the improvement of institutional quality in host countries,further promoting the continuous improvement of FDI quality.The development of the Internet has accelerated the optimization of product structure and the improvement of product added value,stimulating the continuous inflow of high-quality FDI.Then,the Internet development level index and FDI quality index were measured,taking the Internet development level index as the explanatory variable and FDI quality as the explanatory variable,and based on the panel data of 30 provinces in China(except Tibet)from 2006 to 2019,the following conclusions were drawn:(1)After taking the level of infrastructure,human capital,regional economic development,opening up,wages,government control and technology as control variables,The level of Internet development still has a positive effect on the quality of FDI in China.(2)From the perspective of regional heterogeneity,the development of the Internet in the eastern region has a significant effect on the quality of FDI,and the development of the Internet in the central and western regions does not have an obvious effect on the quality of FDI,which may be because the eastern region implemented the policy of opening up earlier,the Internet was popularized earlier in the eastern region,the role of the Internet on the quality of FDI will be more obvious,the central and western regions started to the outside world late,and the information infrastructure construction is not perfect,so the ability to attract investment in the central and western regions is poor The development of the Internet has not been able to have a significant impact on the quality of FDI.(3)The analysis of the mechanism of Internet development affecting FDI quality shows that Internet development can promote the improvement of FDI quality through transaction cost reduction effects,institutional quality improvement effects,and industrial structure upgrading effects.Finally,based on the research conclusions,this paper suggests that the level of Internet development has a positive effect on the quality of FDI in China,so the growth of FDI quality can be promoted by improving the level of Internet development in China.China should seize the opportunity of Internet development,strengthen Internet infrastructure construction,narrow the digital divide between regions,persist in implementing key reform measures,create a good business environment,promote institutional pilots for deepening competition,and create an environment of fair,just and peaceful competition.For enterprises,they should recognize the key role of talents and cultivate high-quality Internet talents so that local enterprises can learn advanced technologies from high-quality FDI.