Impact of Technological Innovation and Covid-19 on the Yangtze River Delta Region’s FDI

Abstract

The Yangtze River Delta is an area in China’s lower portions of the Yangtze River that borders both the Yellow Sea and the East China Sea and contains a large number of coastal ports. Foreign direct investment (FDI) has driven the rapid development of the local economy. However, there are few studies on the impact of local technological innovation on the attractiveness of FDI. This paper examines how technical innovation affects FDI and considers if FDI might be encouraged by technological advancements made during Covid-19. This paper uses the principal component analysis method to establish the technological innovation index. The regression model is established to evaluate the impact of technological innovation and Covid-19 on Foreign direct investment (FDI). We found that technological innovation has a positive effect on FDI. At the same time, under the background of Covid-19, technological innovation is not conducive to attracting FDI. We also provide some recommendations to assist the government in fostering technological innovation. (1) The local government ought to support both homegrown and international innovation. (2) The government should also promote the development of creative talent teams and inspire scientists and technicians to work for regional businesses or launch their own ventures.