Foreign Direct Investment's (FDI) Influence On Sino-American Macro Economy | Posted on:2012-12-20 | Degree:Doctor | Type:Dissertation | Country:China | Candidate:G Q Qiu | Full Text:PDF | GTID:1119330335964919 | Subject:World economy | Abstract/Summary: | PDF Full Text Request | Financial crisis in 1997 and financial tsunami in 2007 seriously hit the world's economy. In 21st century, the annual GDP growth rates of most countries which are around 1% have been the worst in these two decades. These hinder the sustainable development of global economy. China and the United States, being the largest developing and developed countries respectively, should work hands in hands for maximizing the welfare of the people in the world. President Hu Jin Tao's state visit in January 2011 reveals the strains between China and US on one hand and the potential cooperation in investment, monetary and energy polices on the other hand.How to attain a winwin situation for both parties in these aspects? How to realize the substainable economic development? This research may shed much more light on this. Treating FDI as the core macroeconomic variable, attributed with other variables Domestic Investment Stock, Labor population, GDP (Gross Domestic Product), oil price, US M2 stock and USDtoRMB exchange rate, the key objective of this research is to give us much more insight both theoretically and empirically. Furthermore, it may provide us a guideline for policy makers and serve as a lighthouse which directs us where to go.According to this research, China has got to promote inward manufacturing sector FDI and stabilize RMB's exchange rate. US should not only attract much more inward service sector FDI but also maintain oil price at affordable level and implement loosen monetary policy. After financial tsunami, domestic investment which is strongly bouncing back from the bottom does not help recovery of employment. Most important of all, USDtoRMB exchange is proven not a driving force but a hurdle for US employment situation to get back on track. Crosscountry investment, restructuring of local industries and tight collaboration can benefit the sustainable economic development for both countries, thereby finally achieving betteroff welfare of human being.The contents of each chapter are summarized as follows: Chapter 1:Raise the questions and explain the reasons behind this research. Research methodology will be explored and research objectives will be clearly defined. Therefore a complete framework for macroeconomic analysis will be finally established.Chapter 2:Having reviewed the previous research literatures, we will consolidate the theories regarding production functions. FDI and its macroeconomic effects. It is used to give us a guideline sheding much more light on the research direction.Chapter 3:Investing the recent development on FDI and FDI utilization of China and the United States, we expect to forecast FDI's future development which can be transformed to research tools for FDI's macroeconomic effects.Chapter 4:Technology advancement resulted from imitation, spillovers and productivity convergence has impact on employment. This chapter is to dig out its macroeconomic effects, such as output, productivity and structure of industries. Finally, both its positive and negative effects will be catergorized.Chapter 5:This chapter is to introduce statistical tools used in previous studies and this research. Based on the assumptions and restrictions of different tools, we propose the appropriate statistical tool for the research.Chapter 6:Using the statistical tools introduced in Chapter 5, we will investigate the effect of FDI, monetary supply, oil price and ChinaUS exchange rate on the economy of China and US. In chapter 6, we will first identify the growth path of the effective output per worker of China, which will be compared against developed countries like US and Germany. Also, we can infer the total factor productivity of China, which will shed the light on the sustainable development of China. At the same time, we will study the dynamic effects between employment, manufacturing FDI, service FDI and domestic investment stocks.Chapter 7:We will start this chapter by investigating the effect of manufacturing FDI, service FDI and domestic investment intensity on US effect output per worker. Considering the importance of US monetary supply on global economy, we will introduce US M2 into our econometric model, with an aim to reveal the dynamic relationship between M2 and the above economic variables.Chapter 8:We will start this chapter by investigating the dynamic relationship between manufacturing FDI, service FDI, domestic investment intensity and GDP, employment and oil price. Lastly, we will introduce USChina exchange rate, with an aim to reveal the dynamic relationship between USChina exchange rate and the above economic variables.Chapter 9:Based on the theretical and empirical results, relevant policies for China and US will be proposed for maximizing the welfare of two countries. The sincere collaboration and cooperation between these two economy giants will also be a key to open a new chapter of the sustainable economy development.Chapter 10:This chapter serves as the conclusion for the research by claiming the restrictions and assumptions of the research, thereby exploring the space for future research.The innovations of the research are as follows:Firstly. it has already improved MRW (1992)'s convergence model, maximum heterogeneity will be found out with the time series of relevant variables for a single country. Irrelevant assumptions will be avoided and therefore flexibility and fesibility will be enhanced.Secondly, using the central theme of FDI's macroeconomic effects in domestic countries, other macroeconomic variables are included for empirical study eliminating the possibility of having omitted some important variables.Thirdly, giving up the traditional OLS regression (ordinary least square regression) and VAR model (Vector Autoregressive model), we will therein employ SVECM (Structural Vector Error Correction Model). Furthermore, this research has successfully invented a methodology for the optimal ordering of endogenous variables and thus improving the confidence levels of statistics.Fourthly, abundant research results have provided us a guideline for policy makers of both China and the United States.Exploiting advanced empirical models and sophisticated statistical tools (such as Smooth Transition Auto Regression), future researches should explore much more macroeconomic effects of FDI from different industries expectedly. | Keywords/Search Tags: | Foreign Direct Investment, Macro economic variables, Money Supply, Oil price, USDtoRMB Exchange Rate, ChinaUS Cooperation | PDF Full Text Request | Related items |
| |
|