Does FDI Upgrades Export’s Structure? City-level Evidence from Dongguan Using VECM Model

Abstract

Against the backdrop of global value chain restructuring and the deepening of regional integration in South China, Dongguan remains an important destination for export-oriented foreign direct investment (FDI). Utilizing annual data from 1995 to 2024 and employing a Vector Error Correction Model (VECM), this paper empirically analyzes the dynamic impact of FDI on Dongguan's export structure. The export structure is measured by two core indicators: the share of high-tech product exports (LEXS1, reflecting the technological structure of exports) and the share of general trade exports (LEXS2, reflecting the trade mode structure). The findings indicate that FDI maintains a long-term equilibrium relationship with Dongguan's export structure, although the direction of its effect diverges across the two indicators. FDI exhibits a sustained and stable positive effect on the transformation of the trade mode, whereas its impact on the technological structure of exports displays time-varying characteristics—being positive in the short term and negative in the medium term. Although FDI is an important influencing factor, it has not yet come to dominate the evolution of the export structure, with the inertia of the export structure itself still accounting for a significant proportion. This phenomenon reflects the complexity inherent in releasing the structural dividends of FDI. Consequently, it is necessary to optimize the technology spillover environment and cultivate indigenous innovation capabilities to facilitate the transition of FDI from "quantitative accumulation" to "qualitative enhancement."