Empirical Analysis Of The Relationship Between Foreign Direct Investment And Economic Growth Of Hubei Province

In thirty years'development,foreign direct investment(FDI)has become the main form of foreign investment in China,and it played a prominent role in China's economic construction.Therefore,how to evaluate foreign direct investment for the economic growth has become a hot topic.Some scholars believe that FDI is significantly positive for a country's economy growth, but the economy growth is not the reason to attract the FDI;Some scholars think that the economyl growth attracts FDI and FDI has not obvious influence to a country economy growth, even has the negative influence to the host country; But some scholars approve that FDI and the economy growth have mutually relationship to cause and influence.How to scientificly, objectively learn the relationship about the foreign direct investment and the economy growth becomes the important research topic of economy. According to the fact about Hubei province attracting FDI ,this article attempts to make its own interpretation about the argument .After China joining WTO and the rising of the middle areas,the Hubei Province attraction FDI faces the new opportunity.Under this kind of background, we not only should understand deeply the level of economic development and the state of FDI in Hubei, but also need to analyze the relationship between economic growth and FDI, study systematically how FDI influences the economic growth to give some empirical supports and help to the adjustment of the policy of absorbing foreign capital in future.This article Summarise the fundamental research achievement in and out of country and absorbs the effective empirical research ways.Firstly, the statistical data of the Hubei Province from 1986 to 2005 are used to analyze FDI present situation and the tendency of the Hubei Province ; Secondly this article analyzes the long-term relations between FDI and the economy growth, and establish the error correction model; On the basis of long-term relations between FDI and the Hubei Province GDP growth, it adopts Granger's causality test to get the conclusion that FDI has been a reason for Hubei's economy growth. Further more, it gets the concrete effect mechanism which Reflects FDI influence the Hubei Province's economy growth through the establishment of model; Finally,it offers a sum-up of the whole paper and presents a few policy recommendations for further suitable strategy discussion.