Study On The Impact Of Digital Economy On Foreign Direct Investment In China’s Service Industry

With the rapid development of the digital economy,China has become one of the largest digital economy markets in the world.While providing more business opportunities,the digital economy has also greatly promoted the transformation and upgrading of China’s economy.With its advanced modern information and communication technology,the digital economy has become the main economic development engine of a country.In the process of economic and social development,it can provide more flexible,creative,and effective solutions and means to various problems,thus bringing new development opportunities and approaches.In recent years,especially as data and information technologies such as 5G,big data,the Internet,and AI intelligence have grown rapidly,the digital economy is rapidly infiltrating into real life and gradually integrating into it,accelerating the integration of information data and the real economy.Driven by the digital economy,foreign direct investment in China’s service industry has also experienced a significant growth.As a key development direction of the current global economy and society,the arrival of the digital era has influenced multinational companies’ foreign direct investment decisions and investment patterns.The development level of the host country’s digital economy has increasingly become an important reference factor for multinational companies in making foreign direct investment location choices.Based on this,this article mainly analyzes the impact of the digital economy on foreign direct investment in China’s service industry.Specifically,this article first summarizes the connotation of the digital economy through studying and sorting out relevant research literature at home and abroad,and explores the impact mechanism of the digital economy on foreign direct investment in the service industry.Secondly,based on data statistics,a comprehensive study was conducted on the development level of the digital economy in various provinces and cities across the country,as well as the utilization of foreign capital in various service industries in various regions.The industrial characteristics of China’s digital economy and the industrial and regional characteristics of foreign direct investment in service industries were analyzed.Then,based on relevant data from 19 provincial administrative regions in China from 2011 to2020,four indicators,namely,digital infrastructure,digital industrialization,digital technology application,and digital industry innovation,were selected as primary indicators.Using principal component analysis,an index of the development level of the digital economy was calculated,and a fixed effect regression model was constructed.Using Stata software,the impact of the digital economy on foreign direct investment in China’s service industry was empirically tested.The empirical results show that the development level of the digital economy has a significant promoting effect on attracting foreign direct investment in the service industry in China,and this conclusion is still valid after the robustness test.Finally,summarize the conclusions of this article and based on the research findings,propose suggestions for the development of the digital economy and promoting China’s service industry to attract foreign direct investment.