Analysis On The Relationship Between FDI, International Trade And Economic Growth Convergence

The convergence issue of economic growth has always drawn widespread concern both from the government and the academia, and the essence of this issue is to study the growth discrepancy between different regions and countries. It is natural that different regions may see economic growth gaps. With the deepening of economic globalization and development of regional economic blocs, FDI and foreign trade have become an important embodyment for a country to participate in international labor distribution and strengthen international economic exchange. The developing countries actively absorbed FDI, and steadfastly develop foreign trade, boosting their economy and strengthening their overall national strength. Will FDI and foreign trade exert some effect on economic growth convergence? After we established socialist market economy, our openness to the outside world has been constantly deepening. In a wake of this, imbalances emerged between regional economic growth, As a coastal province, Shandong enjoyed a great deal of benefits from foreign trade and FDI and provides a good sample to study regional economic growth. So we take the 17 municipalities of Shandong province as samples to explore the relationship between economic growth convergence and FDI and foreign trade. The main findings of this paper are as follows:First, we survey the previous literature on economic growth convergence, identify the concept of economic growth convergence and several relative terms, and on this basis, summarize three major means to test such kind of convergence. Second, we analyze the situation of FDI and export and import of Shandong province, which gives us a clear understanding of their status quo in its 17 municipalities. Third, we conduct an empirical analysis on related data of the municipalities through testing tools and draw our conclusion that a convergence do exists in some periods for Shandong province; absoluteβconvergence does not exist while conditionalβconvergence exists. So we can see FDI indeed exerts important effects on economic growth convergence in Shandong province while foreign trade doesn't have significant effects. Finally, based on our analysis, we raise several variable proposals to coordinate regional economic growth and promote Shandong's economy to develop in a comprehensive, coordinated and sustainable manner.