Research On The Conduction Mechanism Of FDI And Economic Growth

As the new development of international economic structure, foreign direct investment (FDI) has become one of the most important and active factor in promoting the development of world economy, especially for the economic growth in the host countries. In the past, people put land, capital and land as the three important elements to promote economic growth. In modern society, to attract foreign investment has been seen as a crucial factor in promoting economic growth, particularly FDI, has played a direct role in promoting economic growth for developing countries. Meanwhile, some scholars at home and abroad put a lot of theories, and made some useful research for the relationship between FDI and economics.Since the beginning of reform and opening up, China has gradually become the hot land for foreign direct investment (FDI). For nine consecutive years, from 1993 to 2001 China's FDI has been used only to the United States, the world's second highest. In 2002, China actually used FDI reached 52.743 billion U.S. dollars, more than the United States, and has become the world's largest FDI recipient countries. Therefore, FDI in China has played a very important role in China's economic growth. In the early days of reform and opening up, attracting FDI is mainly to make up the shortfall in funds for domestic use of foreign funds for China's economic construction, emphasized the effect of FDI capital. In the 20th century to the mid-1980s, China's FDI policies on the use of "market for technology" strategy, aimed at the partial opening of the domestic market, attract FDI, thereby introducing technology, and enhance China's technological level; FDI is the main emphasis of the technology spillover effects. These understanding of the role of FDI is in line with China's economic development and historical limitations, is not comprehensive. We believe that a comprehensive understanding of China's reform and opening up of FDI in the role it plays, it is necessary to analyze how the FDI effects in the Chinese economy growth. For this, the article made a meaningful exploration, both from the theoretical and empirical, analyzed in detail the Transmission mechanism form the FDI to economic growth.In theory, we analyzed the transmission mechanism from the FDI to economic growth from technological progress, system changes and the elevation of the level of human capital. First, through technology transfer model and four effect of FDI to the host country's technical spillover, the article analyzed in detail the impact of FDI on technological progress, and from the angles of technology Innovation and technological innovation, the use of micro-economics knowledge, analyzed in detail the impact of technological advances for economic growth, this is a comprehensive reflection of the impact of FDI for economic growth; then, from improving the market mechanism, having demonstration effect and other four perspectives, the article demonstrated the impact of FDI on changes in the system; finally, from the two major perspective of the formal education in the host country and vocational training, the article analyzed in detail the impact of FDI on the elevation of the level of human capital, and from human capital is the"engine",the fundamental driving force and important factor for a country's economic growth, we analyzed the impact of the elevation of the level of human capital on the host country's economic growth.In evidence, first, we analyzed the impact of FDI on technological progress, system changes and the elevation of the level of human capital. When analyzing the impact of FDI on technological progress, we made a Cobb-Douglas production function which contains technological progress, and then made regression analysis uses of SPSS, come to the conclusion that, in foreign-invested enterprises account for the same proportion of the total investment, foreign investment enterprises factor productivity increase by one percentage point to spur China to raise total factor productivity 0.127%; when analyzing the impact of FDI on system changes, we first put the factors which affect our country's system changes together, such as ownership indicators , market indicators and transaction costs indicators, then using principal component analysis for analysis, after that, we analyze the correlation between FDI and system changes, last, we make a granger causality test, come to the conclusion shows that FDI increased by one percentage point each, we will make changes to improve the system 0.135 percentage point, and FDI is one of the factors that cause changes in our system; when analyzing the impact of FDI on the elevation of the level of human capital, first we should work out our stock of human capital in the years, then using correlation analysis and granger causality test to analyze the relationship between FDI and the elevation of the level of human capital, came to the conclusion, FDI increased by one percentage point of each other, would improve the human capital stock of 0.117%, and impact of FDI in China is one of the factors that raise the level of human capital.Then we analyze the impact of technological progress, system changes and the elevation of the level of human capital on our country's economic growth. Here we construct a Cobb-Douglas production function which contains technological progress, system changes and the elevation of the level of human capital, and then made regression analysis uses of SPSS, and calculate the various factors contributing to China's economic growth, the results show that technological progress of China's economic growth, the average contribution rate of 24.33%, the human capital of China's economic growth, the average contribution rate of 18.24%, and system changes to China's economic growth, the average rate was 22.62%.The last part, we put some measures and suggestions from three angles. The first is the technical spillover effect of FDI for China's technological progress, the second is the demonstration effect of the promotion of China's FDI regime change, and the last one is play the role of FDI to improve our human capital.