Analysis On The Impact Of China’s Foreign Direct Investment On The Resources Misallocation In The Home Country

The vigorous development of China’s OFDI ranks first in the world,and its flow and stock are increasing greatly.China’s FDI has been booming,and its flow and stock are increasing.In this case,how China’s foreign direct investment affects the economic growth of its home country has attracted extensive attention.In addition,the mismatch of resources has become factor placing restrictions on China’s productivity and economic growth..Under open conditions,resources can be optimally allocated across borders.In this regard,based on the perspective of factor flow under open conditions,this paper brings FDI and resource mismatch into a unified analysis framework to deeply explore the relationship and mechanism between them.Firstly,this paper combs the literature,reads and combs the literature including how FDI affects the home country’s economy,the causes of resource mismatch,and how foreign direct investment affects the home country’s resource mismatch,so as to lay the foundation for the subsequent theoretical analysis.This paper calculates the mismatch index of 29 provincial administrative regions in China from 2003 to 2019,constructs a panel model to empirically study the impact of China’s foreign direct investment on the resource mismatch of the home country,and constructs an intermediary model to test the impact path.The study found that there are different degrees match in China’s provinces,and there are significant differences among provinces.China’s foreign direct investment has significantly improved the resource mismatch between capital and labor in the home country.Further research found that because of China’s vast geographical differences and the inconsistent economic development speed of various provinces,the correction of China’s foreign direct investment on the misallocation of resources in the home country will vary from region to region.The intermediary effect test results show that whether the factors of production can flow flexibly in the market,the changes of domestic industrial structure caused by macro-control in the home country,and the fierce competition in the domestic market are among the factors that China’s foreign direct investment affects the allocation of domestic resources.Therefore,China should reduce unnecessary intervention by local governments.Chinese government departments should also further promote enterprises to invest more in overseas markets,improve the mismatch of domestic resources and overcapacity,and promote the high-quality construction of China’s economy.