Regional Convergence And Central Rise: An Empirical Analysis From The Perspective Of FDI

This thesis, studies China's regional disparity in a framework of convergence, analyses the genesis of the disparity among different regions in China from the perspective of Foreign Direct Investment (FDI), and attempts to put forward the countermeasures to narrow such disparity.It is widely observed that the regional economic disparity in China widened with economic reform. Further examination of per capita GDP disparity shows that it first narrowed and then widened drastically. The gap between the inland and coast regions has been the dominant contributor to the overall regional disparity. Under the realistic background of the rapid growth of eastern region and the fast developing of western region in recent years, we analyze the problem of "central downfall" by contrasting major indicators on economic and social development.Based on the growth convergence theory, we carry out an econometric analysis to test the convergence hypothesis of regions in China since the enforcement of the reform and open-door policy. The purpose is to find out whether the developing regions can catch up with the developed regions and investigate the factors that influence the difference of the economic growth rates of the province. Our result show that: there is not any absolute convergence trend across the provinces in China, which means the differences of the initial output among the provinces can not explain the differences of the economic growth rates; not only the club convergence has been obviously exhibited, that is, the output per capita congregates within the eastern, central and western districts respectively; but also the conditional convergence has been identified, that is, given the same level of initial human capital, inflow of FDI and other factors related to location, the economic provinces have demonstrated a certain growth convergence. The outcome of this also shows that the unbalanced distribution of FDI in regions aggrandizes the unbalanced development of regions.The third section mainly discusses the relationships between the FDI and economic growth of central region. Since the 1980s, the FDI has become a main way of international capital movements. The abundant inflows of FDI not only alleviate the capital deficiency and foreign exchange deficiency in the economic development, but also persistently enhance the technology level and the institution efficiency in the homeland through the technology spillovers. Following the above idea, the section firstmakes a detailed description on the documents concerned; secondly, using the co-integration and Granger no-causality test, this paper provides empirical evidence on the positive association between FDI and economic growth of central region. We construct an endogenous economic growth model, taking the FDI spillovers as the main variable. The outcome of our research indicates that the FDI has a positive influence on the per capita output, mainly through spillover effect promoting the productivity efficiency of local companies; finally, a further study demonstrates that, FDI has positive effects on increasing total factor productivity. Then we propose some relative policy suggestions on the basis of the analysis.