An Empirical Study On The Effect Of Foreign Direct Investment On Chongqing's Economic Growth

To study the importing of foreign direct investment (FDI) is an important part of international economics and international trade study. As the main pattern of international capital inflows, the effect of FDI on host country's economy has received widely attention. In recent years, the volume of the utilization of foreign capital in China increased year by year. As FDI become more and more important, foreign direct investment has play an important role in various aspects of economics. After Chongqing becoming the fourth municipality of China, many successful experiences have been accumulated in the process of utilization of foreign capital, while there are many practical problems in the fields of importing and utilization of foreign capital and FDI may also have uncertain effect on economic development. Therefore, it's necessary to study the mechanism and the effects of FDI on Chongqing's economic growth systematically, and extend the crucial problems need to be paid attention to, thereby we can derive the policy implications for future development.This paper combines the theoretical analysis with the empirical studies, using econometrics models and questionnaire to study the economic effects of importing FDI and the key factors that affect the economic growth. On the basis of reviewing correlative research, this paper introduces the theory of economic growth, and based on comparing the various economic theories, we derived the mechanism of the effect of FDI on economic growth and construct the theoretical framework of this paper. Then based on the theoretical framework we build econometrics models, through Stat. analysis software Eviews4.1, using the method of cointegration and vector error correction model (VECM) to have the data analysis, testing the capital accumulating effect, labor input effect and the spillover effect of FDI on economic growth. The empirical results indicate that FDI of Chongqing has played good role in labor augmentation, but the capital accumulating effect is not as good as we expect and the spillovers effect various in different aspects. Furthermore, we also test the absorbing capacity of FDI through testing the factor such as: open degree, human capital and policy. Finally, some useful suggestions were given to promoting the development of Chongqing and the west regions.