Research on the Impact of FDI on China's Industrial Agglomeration -- Based on the Empirical Analysis of Regional Data

Abstract

Abstract. As for China, since the reform and open, domestic industries have shown a quite obvious tendency of agglomeration, which catches the attention of both economic researchers and policy makers. However, although it has been proved by the previous researches that China's opening up to the outside world promoted domestic industrial agglomeration; most of the literature focused on the importance of decreasing trade costs to domestic industrial agglomeration, the importance of FDI was always ignored. This is also the main research purpose of this article, from the aspects of FDI to analyze its influence on industrial agglomeration. As follows is the research method of the paper, using the panel data of the 30 Chinese provinces industrial in 2005-2015, and then constructing the econometric model, then testing the effects of FDI on the China's industrial agglomeration. The empirical results show that FDI significantly promoted the China's industrial agglomeration. As follows are the research conclusions of the paper, FDI act on Chinese economic growth and regional disparity adjustment, which means that Chinese government should make rational use of FDI, to further promote the agglomeration of China's industrial, and effectively promote the economic growth and regional inequality.