Abstract: Integrating the theory of multinational corporation investment theory and new economic geography, and taking the externality of agglomeration as an entry point to construct a logical framework of "FDI - externality of agglomeration - green competitiveness",based on the urban panel data from 2005 to 2020,combining the dynamic spatial Dubin model and the simultaneous equation spatial autoregressive model to test the hypothesis proposed in this paper. The study finds that: FDI has a nonlinear effect on green competitiveness based on agglomeration externalities. When the degree of agglomeration is moderate, the agglomeration effect caused by FDI will enhance green competitiveness through channels such as green R & D spillovers, industrial structure upgrade, advanced human capital structure, and enhanced environmental regulation. When agglomeration is excessive, FDI will exacerbate the crowding effect and weaken green competitiveness. The green competitiveness of Chinese cities has the characteristics of volatility and spatial spillover, and its improvement is conducive to attracting FDI with preference for green investment. Heterogeneity analysis shows that the green competitiveness effect of FDI benefits more from the Jacobs externality brought by diversity at the national level and large cities, and benefits more from Marshall externality brought by specialization, but subject to government intervention, this effect is less beneficial in agglomerated economies in small cities.

Key words: FDI, industrial agglomeration, green competitiveness, agglomeration effect, crowding effect