Analysis of the influence of foreign direct investment on the international trade pattern of host countries

Lingnan University, Hong Kong, China

^* Corresponding author: c_80_wzh@163.com

Abstract

This paper aims to explore the impact of foreign direct investment (FDI) on the international trade patterns of host countries. Based on a comprehensive analysis of relevant domestic and foreign literature, this study sorted out the basic theoretical framework of the interaction between FDI and international trade. On this basis, using the latest panel data and econometric methods, this study conducted an empirical analysis of how FDI affects the export structure, import structure and trade balance of host countries. The findings indicate that foreign direct investment (FDI) plays a crucial role in enhancing the technological advancement of host nations, boosting the sophistication and value of exported goods, and aiding in the diversification of imported products while decreasing reliance on specific raw materials and technologies. In addition, the study also found that FDI can help the host country to improve its trade deficit and enhance its position in the global value chain. Finally, this paper further verifies the above conclusions through case analysis, and puts forward some policy suggestions for the government, including optimizing the foreign investment introduction policy, strengthening the cooperation between local enterprises and foreign enterprises, so as to make better use of FDI to promote the sustainable and healthy economic development of the host country. This study offers a new perspective for understanding the dynamic relationship between FDI and international trade, but also provides an empirical basis for formulating more effective foreign investment policies.