Foreign Direct Investment And Income Distribution Of Chinese Residents

Coupled with the enlargement of attracting foreign direct investment (FDI), our country has witnessed an increasing gap for the residential income distribution, in the fixed assets, The source from inflow FDI has accounted for almost half of its share for the coastal provinces. While most of the provinces in the middle and western areas have only attracted a little amount of FDI. It is no doubt that FDI has become an important factor influencing domestic income distribution.The purpose of this thesis is to conduct an in-depth research on how foreign direct investment influence residential income distribution in our country. Firstly, this thesis undertakes a survey on respects as theoretical analysis, empirical research around the world and research about our country, to generalize the effects posed on host countries by FDI in respects of economic growth in developing host countries, advance in technique and product efficiency for local companies, augment for wage and income, etc. Then theoretical analysis on the basis of specific factors model and empirical analysis was made afterconsidering the status quo and feature of FDI and residential income distribution in our country. Finally, a conclusion was reached that unequal distribution of FDI in different areas and its attraction to various advantageous resources have induced an income distributional effect on domestic residents. FDI has a strong correlation with the domestic residential income distribution. Through the industry links, spillover effects from sectors of FDI, attraction to money and also promoting trade to influence income distribution gap between FDI and non-FDI sectors, also between FDI-abundant areas and FDI-scarce areas, FDI finally posed a enlarging income gap between different areas, especially between coastal and western areas, and the whole country too.In the last two chapters, aiming toward two channels throughwhich FDI influences income distribution, that is, technical spillovers and outward trade, I conduct two special studies. The conclusions are, through theoretical analysis, an upside-down U shape relation exists between technical spillovers and wage gap of foreign and domestic sectors. After a special study about China, I do find an upside-down U shape relation between technical spillovers and wage gap, while this case doesn't emerge when a graph is depicted on the time-serious data of the whole country from 1993 to 2000. So the upside-down U shape relation cannot be asserted in case of the whole country.The income distribution effect of FDI through outward trade channel shouldn't be ignored too. It has different behaviors for the whole country and various areas. Within the whole country, through attraction to the labor flow, the effects of FDI on skilled and non-skilled labors is different, and thus having different income distributional effects on labors in various levels. While to the different areas, FDI has a stronger trade-promoting effect on coastal area than on western area, which also has different effects on the income distribution between these two areas.