Foreign Trade, FDI and the Upgrading of Regional Industrial Structure in China: Based on Spatial Econometric Model

Abstract

The upgrading of industrial structure is the core means of coordinating economic development and environment protection. Its spatial agglomeration can also reduce environmental pollution partly. The upgrading of China’s industrial structure has become an important issue concerned by the whole society. To better understand this issue, based on the provincial data of China (1997–2017), this paper strives to explore the spatial effects of foreign trade and foreign direct investment (FDI) on the upgrading of China’s regional industrial structure by constructing the weight matrix of economic distance, and by introducing the spatial autocorrelation analysis method and spatial panel econometric model. The results show that: 1. The Moran’s I index of China’s import, export, FDI, and industrial structure upgrading has passed the 5% significance level test, displaying remarkable spatial agglomeration characteristics. 2. Foreign trade and FDI are important driving factors to upgrade China’s industrial structure. 3. Foreign trade has a significant spatial spillover effect. Imports and exports can not only promote the upgrading of local industrial structure, but also radiate to other regions, promote or inhibit the development of its industry, and further affect the national data. 4. The spatial spillover effect of FDI is not significant. Finally, some policy suggestions are put forward.