A Granger Causality Test on OFDI and IFDI in Industrial Upgrading and Optimization

This paper analyzes the roles and impacts of Outward FDI and Inward FDI on the domestic industrial upgrading. The study shows that Inward FDI does play an important role in the industrial structure optimization especially for the upgrading of the secondary industry and tertiary industry. And Outward FDI of China only have impact upon secondary industry adjustment but not upon the development of tertiary industry so that the Outward FDI only have a limited impact on China's industrial restructuring. Therefore it is necessary for Chinese Administration to issue new policies to guide FDI especially the Outward FDI to help promote the domestic industrial structure upgrading.