FDI, wage and urban functional division

FDI will promote the spatial collaborative agglomeration of producer services and manufacturing industry,and strengthen regional industrial connections that drive deepening of functional division within city clusters. This study utilizes panel data from 16 major urban agglomerations in China, revealing the significant promotional effect of FDI on the deepening of functional division in urban agglomeration. It is found that wage gaps play a mediating role in the influence of FDI on the functional division of cities clusters. The conclusion remains robust after employing the Sobel test and instrumental variable method for endogeneity testing. Fully leveraging the role of FDI in the collaborative function division within urban agglomeration can promote the optimization of regional resource allocation.