How Does FDI Enhance Urban Sustainable Competitiveness in China?

Abstract

Urban sustainable competitiveness (USC) is one of the important indexes to measure the high-quality development of cities in China. Meanwhile, foreign direct investment (FDI) plays the prominent role in improving urban sustainable competitiveness. Therefore, this analysis aimed to test the impact of FDI on the USC and its mechanism using the intermediary effect model with a sample of 282 cities in China during the period 2012–2018. The influencing mechanism includes the scale effect, the technological effect, and the structural effects. The results show that: first, FDI is significantly and positively related to the USC of China, and the scale, technological and structure effects all play a mediating role, with the scale effects being the most significant. Moreover, population size shows negative effect on the USC. Second, the impact of FDI on the USC is regionally heterogeneous. FDI can significantly improve the USC in the eastern region, but has no significant effects on the northeastern, central and western regions. Third, FDI in the eastern region affects USC through structural effects, while the scale and technological effects do not play a mediating role but both effects can directly affect USC. FDI in the northeast region still has the structural effect, but this structural effect does not indirectly affect USC, while FDI in the western region has both scale and structural effects. In addition, the technological and structural effects in the central region have a direct impact on USC, while the scale effect in the western region has a direct impact on USC. Therefore, the findings suggest that utilizing FDI should take into account regional characteristics in China.