The Empirical Research on the Effects of Fdi on Industrial Agglomerations
|School||Nanjing University of Finance and Economics|
|Keywords||Henan Province FDI Industrial agglomeration|
Since the China’s reform and opening up, the foreign direct investment inward has increased greatly both in size and number, which directly contributed to the prosperity of China’s exports. At present, foreign direct investment on China’s economy has become increasingly obviously. Under the new situation of accelerating pace of world economic integration, foreign direct investment is more and more important in the allocation of global resources. To some extent, the amount of foreign direct investment represents a country or region’s economic development level. It’s generally agreed that foreign direct investment has a clear role in promotion on industrial agglomeration and industrial agglomeration has also become an important factor in foreign direct investment location choose.However, Henan province, which is the fifth among the provinces and cities regarding to the total economic output in 2009, does not have much foreign investment and has played a very good role in the promotion of industry agglomeration and the industrial clustering in Henan Province has been at a low level. In recent years, with the rising labor costs in developed eastern provinces, a new round of industrial transfer has began both nationally and globally and the labor-intensive foreign-funded enterprises have come to a more competitive labor cost areas, Henan Province should take this opportunity to become the new foreign investment concentrated area and achieves economic takeoff while the completion of industrial clustering.This article is divided into five parts. The first part is the literature review, firstly, the main theories of Foreign Direct Investment and Industrial Agglomeration were reviewed, then the Theories of the role of foreign direct investment on Industry Cluster were reviewed. The second part describes mechanism of the foreign direct investment and Industry Cluster and further analyzed relationship between them from the perspective of theory and economics, , especially foreign direct investment in promoting industrial clustering. The third part described the status of FDI and industrial clustering in Henan Province in detail by large amounts of data, which is mainly for the empirical analysis in the fourth chapter in order to have a more clear understanding intuitively of FDI promotion to industrial clustering through data. In the fourth part based on the analysis to foreign direct investment and industrial clustering in Henan Province in the third chapter, the two indicators of local specialization index and lnFDI were selected to prove empirically FDI promotion on the industrial agglomeration in Henan Province. More over the paper find out the industry which should be strengthened regarding to FDI introduction in Henan province. In part V, the corresponding countermeasures and suggestions were proposed based on the previous theoretical analysis to the current foreign direct investment in Henan Province and empirical test.