FDI, new development philosophy and China’s high-quality economic development

Abstract

AbstractNumerous studies have extensively investigated the influence of foreign direct investment (FDI) on China's economic development from diverse angles, encompassing technological innovation, industrial structure, environmental pollution, foreign trade, and more. However, there is a scarcity of studies that comprehensively examine the hollistic impact of FDI on China's present model of "high-quality" economic development. Therefore, this study proposes a multi-path mechanism using the partial least-squares structural equation modeling to investigate the direct and indirect effects of them from 2012 to 2021. The findings show that, in general, FDI has played a crucial role in promoting high-quality economic development of China nationally and regionally, such as innovative development, green development, shared development, foreign trade, and economic security. Meanwhile, FDI has had a negative impact on harmonized development. Moreover, FDI has had a negative impact on the foreign trade in the middle region; while, FDI has not promoted high-quality economic development directly in the western region. Therefore, a scientific understanding of the relative importance of different paths can help decision-makers make more valid decisions, such as scientifically guiding FDI into rural areas and the tertiary industry; encouraging FDI firms to export in the middle region, increasing the entry threshold for FDI in the west region.