Abstract: With the in-depth promotion of the “Belt and Road” initiative, the strategic position of China’s border areas in opening up is becoming more and more prominent, and it is of great practical significance to explore whether foreign capital entry can effectively improve the total factor productivity of enterprises in border areas. Based on the data of samples of listed companies in the frontier region from 2003 to 2021, this paper explores the impact of foreign capital entry on the total factor productivity of enterprises in the border areas. The findings show that foreign capital entry significantly enhances the total factor productivity of enterprises in the border areas, and this positive effect is verified in the robustness tests of different models, indicating the reliability and consistency of the research conclusions. Intermediation effect analysis finds that foreign capital entry plays a key role by alleviating the financing constraints of enterprises, providing more capital and resource support and lowering financing barriers for enterprises in border regions. Further analysis finds that the facilitating effect of foreign investment is heterogeneous across industries, government intervention also has an impact on the foreign investment effect, and the intensity and direction of policy support may change the actual role of foreign investment. The research in this paper provides empirical evidence to further optimize the opening-up strategy of the frontier region and provides reference for the government to formulate relevant policies.

Key words: foreign capital entry; enterprise total factor productivity; border areas; financing constraints; government intervention

Reprinted from Guangxi Economic Journal, 2024,42(06):17-28.