The Analyze Of Economic Effect On China Direct Investment Abroad

Since the initiation of economic reforms, great achievements have taken place in China foreign economic cooperation, and China direct investment abroad (CDIA) has become larger and larger year by year. However the theoretical and positive researches on direct investment abroad of developing countries are less than enough, let alone the studies expanding to China. On the basis of researches of direct investment abroad and comprehensive analysis of the current situation of China direct investment abroad, this paper tries to find the meaning of CDIA as well as factors to affect economic effect on CDIA. This paper uses quantitative analysis and qualitative method to test the effect from direct invest abroad to economic progress, international balance of payment, technical progress and employment.Main findings are as follows:After analyzing the effect from CDIA to economic progress and international balance of payment using Granger causality test, we find that economic progress is the causation of the change of CDIA. Besides, CDIA is the causation of the change of international balance of payment.After getting the Solow residual value, which is usually to mirror technical progress, using Solow residual valuation method, we analyse the effect from CDIA to technical progress using Granger causality test only to find that after some lag period the CDIA becomes the causation of technical progress.After analyzing the affect from CDIA to employment using adjusted gravitation model, we find that CDIA in current year may decrease domestic employment while in the long run, the increasing of CDIA is accompanied with the growth of employment. Besides, CDIA is far from the main driven force of Chinese employment for the reason of the scale of CDIA.With preceding findings, this paper claims to encourage these positive factors to choose some high return with low risk projects to expand our export as well as our market share. This paper also exerts to consummate some policies in investment entity, investment industry allocation and investment positioning to encourage the effect of CDIA to economic growth.