Research On Effects Of Regional Discrepancies Of FDI On Regional Income Disparities In China

During the reform and openness period, the Chinese economy keeps a continuing and rapid growth, but regional income disparities expand gradually, especially between the east and the Midwest. At the same time, Foreign Direct Investment (FDI) inflows into China largely, but FDI in various regions is lopsided. FDI in the eastern region accounts for absolute dominance, and the inflow of FDI is very small in most parts of the Midwest. The regional discrepancy of FDI is exceptional different. Undoubtedly, differences in the regional distribution of FDI have effects on regional income disparities in China, which is to be concentrated in this thesis.The purpose of this thesis is to conduct an in-depth research on how FDI influence regional income disparities in our country. Firstly, this thesis undertakes an empirical description about regional income disparities and the dynamic changes in China. And it makes systemic analysis about the absolute disparity, growth rate and relative size, which confirmed that there exists the underlying relationships between regional discrepancies of FDI and regional income disparities. We calculate the standard deviations of per capita income and per capita FDI in regions. And we analyze the long-term equilibrium correlations, error correction model, Granger causality relationship, the impulse response function and variance decomposition between the two standard deviations with time series analysis, these prove that FDI regional discrepancies is the important reason which causes regional income disparities in China. Secondly,we discuss the income distribution mechanism and approach of FDI in China. And we build the income decision function with various regions panel data. Our regression based on the panel data shows that FDI, domestic capital, the opening degree, human capital, financial support and the level of urbanization influence the income of various regions differently. Because of the eastern region have their advantages, the convergent effect of capital, the diffuse and spilled effect of technology, FDI influence on income is greater in the east than in the Midwest, We analyze the factors of FDI location choice. Finally, this thesis gives the politic suggestions on how the Midwest catches up with the east in indraught FDI which can reduce the regional income disparities...