An Empirical Analysis on Taiwan Direct Investment and ertical Intra-industry of Electronic Information Industry

The modal of Fukao et al.(2003) analyses the theoretical relationship between FDI and vertical intra-industry trade, the result shows that when the FDI cost and the trade cost are negligible, the FDI can increase the vertical intra-industry trade between the two countries which have the factor gap. At first, this paper analyses the theoretical relationship between Taiwan FDI and vertical intra-industry trade of electronic information industry by the modal of Fukao(2003) and related data. Then we carry out empirical analysis by the Mainland and Taiwan electronic information industry trade data and Taiwanese FDI of electronic information industry data. At last, the promotion relationship between the direct investment of Taiwan of the electronic information industry, the differences of resources in cross-strait and vertical intra-industry trade of the electronic information industry was proved by Granger causality test.