Does the Construction of Free Trade Zones Improve The Quality of FDI Utilization

Based on Yearly Propensity Score Matching and Multi-Period Double Difference Model

Abstract

Since the Shanghai FTZ was established in 2013, 21 FTZ have been set up nationwide, forming a strategic layout featuring coordination between east, west, north, south and China, and overall coordination between land and sea. At the same time, our economy has entered a new normal, the transformation of foreign capital management system is accelerated, the level of investment is continuously improved, the pace of "going out" is accelerated, and it is necessary to improve the quality of FDI utilization. Based on the inter-provincial panel data from 2013 to 2019, the establishment of FTZ was regarded as a quasi-natural experiment, and the effect and influence mechanism of the establishment of FTZ on the utilization quality of FDI were explored by using the multi-stage differential method, and the reliability of the regression results was examined by a series of robustness tests. The study found that the establishment of FTZ significantly promoted the improvement of FDI utilization quality. The free trade zone has significantly and positively promoted the utilization level of foreign direct investment through the moderating effects of magnetic attraction effect of business environment, reduction of access facilitation effect and industrial agglomeration precipitation effect. In the current world situation, the research conclusion of this paper provides theoretical support for China to strengthen the win-win cooperation with other countries by using free trade areas, and provides enlightenment for the establishment and development of free trade areas in the future.