A Research Into Crowding-in And Crowding-out Effects Of FDI In Guangdong Province

As the development of FDI, more and more attention is being paid to its negative effects. One important problem is about how the FDI affect on the flowing-in country' s investment: whether the FDI crowd in the domestic investment or crowd out the domestic investment?This essay researches the crowd-in and crowd-out effects in Guangdong Province. First of all, it analyzes the transformations of FDI in amount, distribution in different industries and different areas, the flow-in patterns and the origins in Guangdong Province since 1979．Then, it sets a ADL model, and chooses the interrelated data (FDI and Domestic Investment) arranging from 1979 to 2005 to establish equations from which the essay can analyze the short-term, middle-term, and long-term influence that FDI cause to the Province' s domestic Investment. Inclusions indicates: short-term effect: crowd in effect changes to crowd out effect, totally, FDI crowds in domestic investment in Guangdong province; mid-term effect: crowd out effect changes to crowd in effect, totally, FDI crowds out the province domestic investment; long term effect: FDI crowds in Guangdong' s domestic investment, while this crowd-in effect is become weaker and weaker.The essay then interprets the mechanisms about how the FDI affects domestic investment. Considering the economic conditions of Guangdong province, it analyzes the reasons why FDI make different affects in different periods as well as why this change appears. Finally, it gives out the policy suggests on reinforcing Crowd-in effect and weakening Crowd-out effect.