A Primary Study Of Interrelationship Among Foreign Direct Investment, Technical Improvements & Economics Growth ---A Practical Analysis Report In Xi'an City, Shaanxi Province

On the basis of Robert Solow' s Economics Development Model ( "the rest value method" ),the paper has studied and analyzed the interrelation between technical improvements and GDP of P. R. C , Shaanxi province and Xi'an City in the year of 1985?000. As well as the interrelation between FDI and GDP, that among FDI, technical improvements and technical level of P. R. C and Xi'an City in the same period. In the end, the paper put forward some proposal.Creative ideas in the paper are as follow: Firstly, it has pointed out that the essential condition of applying Solow's "the rest value method" is the market economic system, and deemed that P. R. C had gradually satisfied above-mentioned condition after 1985; Secondly, it has defined economical meters and parameters: China should take the average of the growth rate of "working persons in the whole society" and "total salary of all working persons" as developing speed of the labor volume. The fixed assets investment ought to be regarded as the capital volume, the flow fund should not be brought into the capital volume. The output elasticity of labor " a " should be 0. 3, The output elasticity of capital " {3 " should be 0.7 in current P. R. C according to the theoretical consequence and experimental estimation; Thirdly, it has estimated technical improvement rate of P. R. C, Shaanxi province and Xi'an City, the contribution of technical improvements to the GDP as well as the technical level of each year from 1985 to 2000. In addition, it has analyzed the feature and problem of technical improvements; fourthly, it has established a partial metrological economic model. For example, it created the exponential relationship model between FDI and GDP on the basis of Cobb-Douglas function, the liner relationship model between FDIand the technical level of P. R. C and Xi' an City.Key conclusions of this paper are: (l)The contribution rate of technical improvements to GDP of Xi'an City reaches 38%, highter than that of shaanxi province(36. 6%) which is approximate to the average national level (30.4%).The whole trend is developing. The govermental interference will be not conducive to the technical improvements. Chinese economy is yet classified into the extended developing type. The contribution rate of technical improvements to GDP is just like that of western developed contries in the 1940s to 1950s. For this reason, it will have no time to delay the transformation of economic developing mode. In addition, the active financial policy conducted by the state since 1998 has caused negative effects to technical improvements and will not be favorable to turn the economic developing mode into the intensive growing mode. Therefor, it is suggesteg that this policy be faded out as soon as possible. (2)A sduty internal coexistent relationship has existed between FDI and GDP of the whole nation, the elasticity of FDI to GDP is 0.6. The internal coexistent relationship also has existed between FDI and GDP of the Xi'an City, and the elasticity of FDI to GDP is 0.57. (3)The foreign investment has obviously resulted in outgoing effects for China's Knowledge and technique. The indirect FDI's promotion of economic development resulted from stimulating technical improvements is much greater than that of directly promoting GDP's growth if FDI is used as a part of capital. The interralation highly exists between FDI and technical improvement of the whole nation and Xi' an City.It is thought that the study of this paper might have the following theoretical and practical significance. The first, the conclusion can be made for contribution rate of technical improvements to GDP after carrying out the open & reform policy of P. R. C so as to further analyze the problem, find out the difference and formulate the relevant policy. The second, China's entry to WTO will enhance the absorption of FDI, the study ofquantitative relation between FDI and GDP, FBI and technical improvements will stimulate the people to further release their mind and enlarge the scale of absorbing...