Empirical Study On The Relationship Between Foreign Direct Investment And International Trade In Guangdong Province

Since China started establishing a series of policies to absorb the foreign direct investments(FDI) in 1979, Guangdong Province walked through an unusual and rapid road to develop the FDI and international trade . In the last few years, the relationship between FDI and international trade has become the hot spot that both the domestic and international academic circles concern. The research of the relationship between FDI and international trade will ensure us to know clearly the degree to which FDI which flowed into Guangdong Province and international trade effect each other and help the government take the right measures and make policies accordingly. Exactly because of the above points, this paper makes a positive analysis of relationship between FDI and international trade.In the first place the paper introduces some theories related to FDI and international trade , the amount of FDI which flowed into Guangdong Province and general situation about international trade during 1982-2003 , and the present research into the relationship between FDI and international trade in both domestic and foreign academic circles.In the second place the paper introduces some methods and models : Vector Autoregression, the cointegration of Vector Autoregression , and Impulse Response Function , which is on the basis of Vector Autoregression.In the third place the paper introduces the positive analysis. The following aspects are included: the establishment of Vector Error Correction Model, the test of causality between FDI and international trade , and the analysis of the degree to which FDI which flowed into Guangdong Province and international trade effect each other.