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Promoting Sustainable Manufacturing Growth Through Foreign Direct Investment and Foreign Trade: Evidence from China’s 28 Sub-Industries

Year: 2025

Type: article

Abstract: This paper systematically explores the dynamic effects of foreign direct investment (FDI), foreign trade, technological innovation, and human capital across China’s 28 sub-industries. The results show that FDI and foreign trade significantly promote manufacturing output growth, while technological innovation and human capital have a more sensitive response to growth fluctuations in the short term. The Granger causality test shows that FDI, technological innovation, and human capital all have strong predictive power and can effectively predict the future trend of manufacturing output. The impulse response function and variance decomposition analysis further reveal the key role of these factors in promoting the manufacturing industry’s long-term sustainable development. Based on the above findings, this paper suggests that local government should continue to optimize the structure and quality of attracting foreign capital, increase the support for technology research and development and intelligent manufacturing, enhance the added value of export products, and strengthen human capital investment so as to promote China’s manufacturing industry’s high-quality and sustainable development and provide reference for other developing countries’ manufacturing development.

Source: Sustainability

DOI: 10.3390/su17209059

Authors: Xiaomei Li, Radziah Adam

Institutions: Universiti Sains Malaysia, Guangdong Technology College

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $2,896