| Moving towards globalization of economy together with the speeding-up integration of international capital markets is an outstanding development which taking place during the past decade. Facing this situation, how to develop the economy of developing and less-developed countries or areas by attracting Foreign Direct Investment (FDI) has aroused deep concern among the academics. The study objective of this paper is FDI in Shaanxi province. With the aim to improve the FDI quality and structure in Shaanxi, the new environmental changes brdught by China's membership of WTO and Western Development Strategy were summarized; and the economic effects were thoroughly analyzed by employing FDI and Economy Growth theory. The specific functions that Shaanxi provincial government should perform in macro-controlling FDI were then proposed accordingly. The author of this article wish this research paper could be beneficial to other western provinces when they utilizing FDI. Basically, this paper comprises the following parts: 1.Literature review. Among the comprehensive International Direct Investment theories, the literature about FDI theory and Host Country Economy-Development Theory is a focus: the initial researches of FDI's effects on improving host countries' welfare, Internal-Growth Model, New Growth Theory and Growth-Economics such as Dual-notch model and Quadruple-notch Model, and the analysis of real economic phenomena conducted by foreign and civil economists were reviewed. All these were proven to support the argument that FDI can promote economic development, bridge the shortage of capital, popularize advanced technology, improve industry structure, create foreign trade,and make effect on employment. This is theoretical foundation forattracting FDI in Shaanxi Province.2.The advantages and disadvantages of FDI attraction in Shaanxi.FDI in Shaanxi is subject to international capital market changes, civil economic situation and its own economic conditions. The opportunities for Shaanxi arise from the enlarging scale of international capital market, promising prospects of Chinese economy, and its rich mineral, and tourism resources, strong technical force. However, Shaanxi still confronts such threats as current recession of global economy, reduction of FDI from the major developed countries, fierce competition from other countries and provinces, and its disadvantageous geographical location, unfavorable investment environments, and poor industrial structure. 3.General introduction of structure, characteristics, and development of FDI in Shaanxi in past decades. The major contribution of FDI to Shaanxi economy since the Reform and Opening-up policy were summarized, and the FDI's source structure, scale, geographical allocation, and investment methods were analyzed deliberately, the conclusion is that the most of FDI is from Hong Kong, Taiwan and Japan; the "one-line two-belts" area attracts majority of foreign investment; joint-venture is still the prevailing mode, but the proportion of wholly foreign-funded enterprises is rising; the scale of FDI is going up. 4. FDI's influences on the economic development of Shaanxi Province. By applying Harroad-Duoma model, the statistical analysis reflects that FDI had beneficial effects on Shaanxi economic growth. The further investigation of the influences of FDI on capital, tax, employment, industrial structure, technical improvement, and foreign trade arrived at the conclusion that FDI is beneficial to following aspects to some degree: filling up the notch of savings and foreign exchange, introducing advanced technology and management, exploring and preparing human resource markets for further economic growth, and solvingunemployment problems. Nevertheless, there are also some negative consequences associated with FDI such as "pile out" effects of capital and employment, technology transfer, and some unpleasant impacts on industrial structure.5. Illustration of the specific functions that Shaanxi Provincial Government should exercise when att...
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