Research On The System Of Attracting Foreign Direct Investment In Laos And Its Economics Effects

Since the implementation of economic opening-up in Laos,great progress has been made in the use of FDI,which is closely related to the continuous improvement of FDI system in Laos.At present,the Lao government is making efforts to continue to actively attract foreign investment.It can be affirmed that foreign direct investment plays an important role in promoting the sustained and stable economic growth,upgrading the industrial structure,promoting technological progress,and promoting institutional reform of Laos.With the change of FDI system in Laos,the direct crowding in effect on FDI in Laos is the most obvious,which indirectly promotes the economic growth,the improvement of infrastructure and the employment rate of Laos.However,the foreign direct investment system in Laos has also produced crowding out effect to some extent due to the content and regulations of the system,including weakening the competitiveness of local enterprises in Laos and aggravating the imbalance of regional economic development.Based on the theory of foreign direct investment system and institutional economics,based on the current situation of attracting foreign direct investment in Laos and the current situation of economic development in Laos,this paper discusses the emergence and change process of foreign direct investment system in Laos,analyses the characteristics and causes of the change of foreign direct investment system in Laos under the framework of institutional theory,and then analyses the basic contents of foreign direct investment system in Laos This paper studies the efficiency and effect of FDI system in Laos,and studies the mechanism and path dependence of FDI system in Laos and whether it has economic effect.According to the theory of institutional economics,such as the theory of institutional change and the theory of institutional effect,FDI,as a kind of institutional arrangement under the market economy,can promote the transition from the original planned economy to the market economy.Under the framework of David fini's theory,the factors that affect the institutional demand and supply represent an important method to establish an empirical model of institutional change.Therefore,when analysing the institutional effect of FDI,we need to consider other important factors that affect institutional demand and institutional supply.In the process of Laos' economic system changing from planned system to market system,the "intermediary" of foreign direct investment,which includes system contents,acts on the change and effect of system.A basic proposition of new institutional economics is that institution is endogenous and has great influence on economic growth.The function of institution is reflected in its influence on economic growth.Foreign direct investment system(FDI)is a huge branch system,its influence process is not reflected by one kind of FDI data value,but by a variety of data index sets that affect the tendency of foreign direct investment(FDI institutional factors).In view of the high coefficient dispersion of this many to one evaluation value model,this paper takes the admittance system,the examination and approval system.Management system and incentive system are four first-class dimension indicators in the evaluation index system of the FDI.The dimension variables are selected from four different institutional perspectives,with the help of MATLAB software,correlation analysis and principal component factor analysis are carried out among the variables.Cobb Douglas production function is taken as an econometric model,and Co integration analysis and regression analysis are used to study foreign direct investment as well as the co integration relationship between the system and economic growth in Laos.Through the experiential analysis,it is concluded that the short-term policy incentives in Laos can not fully stimulate the increase of the proportion of foreign direct investment.From the perspective of long-term development however,there is an obvious positive correlation between the foreign direct investment system and the economic growth of Laos,and this positive correlation will increase the GDP of Laos by 0.7259% for every 1% increase in the comprehensive system value of FDI.And the impact of foreign direct investment on Laos' economic growth(GDP)is relatively small in the short term,that is,FDI fluctuates by 1 percentage point,then the economic growth will change by 0.391628 percentage points in the same direction,and the adjustment coefficient of GDP is-2.093457.On the whole,there is a positive correlation between the foreign direct investment system and the economic growth of Laos.Among them,the management system,access system and incentive system are the main influencing factors to promote economic growth and FDI investment in Laos.Therefore,it is proved that Laos' FDI system and its total value of changes can stimulate and promote the economic growth of Laos,and have obvious economic effects.Based on this,in the end,through the analysis of the economic strategic objectives and positioning of the foreign direct investment system in Laos,this paper puts forward the countermeasures and suggestions for improving the economic effect of the foreign direct investment system in Laos and avoiding the crowding out effect.