Dynamic interaction between foreign direct investment and the new urbanization in China

摘要

At the macro-national level, foreign direct investment (FDI) can effectively promote the new urbanization in China. However, at the urban level, the interactions between FDI and the new urbanization are still not clear. To answer this question, this study constructs a new urbanization development index system based on a panel data set of 271 cities in China from 2003 to 2014. The weights of 26 secondary indicators are determined by the entropy method, and the spatial and temporal effects between FDI and the new urbanization are analyzed using the Panel Vector Autoregression model. Furthermore, direct-indirect effects of urbanization and that of FDI are respectively studied from short-term and long-term two visual angel. The results show that the FDI inflow is an exogenous motive force for the new urbanization, and the new urbanization provides strong support for attracting foreign capital. However, FDI in the neighboring areas is not conducive to local urbanization, and the urbanization of the surrounding areas will inhibit the local FDI Inflows.