Panel Data Analysis Of The Relationships Between Foreign Direct Investment And Growth Rates Of Provinces In China's Economy

FDI, that is foreign indirect investment, also known a foreign direct investment or international direct investment. From the perspective of the host country, direct foreign investment in China are generally referred to as foreign direct investment, because of China's direct foreign investment also includes the concept of China's Hong Kong, Macao and Taiwan, the Chinese mainland's direct investment, and investment from the point of view , commonly referred to as foreign direct investment. Since the 1980s, the flow of international capital has become increasingly active, direct investment has become a major capital flows, access to the developing countries has also become the main channel for external resources. In the late 1980s, global foreign direct investment has reached a total amount of 1.5 trillion US dollars. After entering the 1990s, the scale of international direct investment had expanded even more, with a rapid growth trend.Foreign direct investment for economic growth has a tremendous role in promoting Western and Chinese scholars in this area of the large number of theoretical and empirical studies. Borensztein, Gregorio and Lee (1995) The use of the group of developing countries in 1970-1989 data, testing the OECD direct investment in developing countries, the impact of economic growth, and come to the following conclusions: First, FDI technology transferring is an important tool for economic growth and makes a positive contribution to economic growth and the contribution of higher domestic investment; Second, foreign direct investment and human capital is highly synergistic relationship, FDI in the host country depends on the growth of the host country's human capital development; Third, foreign direct investment has not squeezed out domestic investment, but has driven domestic investment. It should be stated that the use of the theoretical model of economic growth of foreign direct investment to the host economic impact, but did not prove that foreign direct investment to the host of the "technological spillover effect", and can only be described as "technology spillover" which provided indirect evidence. Arrken and Harrison (1999) Acquisition Venezuela more than 400 manufacturers'in the 1976-1989 financial data which was about FDI on the host country's technology spillover effect. The following results: First, there is higher foreign ratio in the portfolio of business assets, there is higher production and efficiency ; Second, the same industry in the higher proportion of the foreign-funded enterprises, which native-funded enterprises in the lower productivity, Third, foreign investment generally invested in the industry with high efficiency ,and made cooperation with these native-funded enterprises which was more efficient; Fourth, in the native-funded enterprises, "technology spillover" effects were more obvious, but internal and foreign-funded enterprises "technology spillover" effect was not clear. Compared with Western scholars, Chinese scholars from more developing countries, especially from China's economic development point of view, considered the introduction of FDI contributing to economic growth. Because of the difficulties of the theoretical research, our scholars did more empirical analysis. Some of these research findings included: Liangzhicheng (2000), made a establishment of the FDI general equilibrium model within the framework of the endogenous growth , using the experience of China's FDI data to find the existing scale and the actual role of FDI to China's economic growth with a statistical test and empirical analysis, and the conclusion is: at present China's FDI level of the overall scale is still reasonable, FDI to China's economic growth is more notable, Chen Lang South, Chenjinghuang (2002), using data in 1981-1998, in the new classical growth model, regarding FDI as an independent volume, inspected the FDI on the impact of China's economic growth, study results showed that the growth rate of the FDI of the stock and GDP growth rate had a linear correlation.LIUxue, Xu-US (2005) through the research methods of panel data and time series, made a study about the contribution of FDI to China's economic growth and importing and exporting growth using the Empirical Analysis , the analysis of the results showed that in China's reform and opening up process, FDI to China's economic growth played a certain role in promoting China's development in many fields.In this paper, used a method of gradual increase in the explanatory variable, and used Hausman test to test the effects of fixed and random effects. There is the final model 1.7:There are some conclusions:①FDI to economic growth have significant role in promoting;②FDI with a secondary level of human capital has a technology spillover effect;③DI coefficients were significantly positive that the domestic investment raised the growth of the economy.④DUM coefficient is notable positive that country's preferential policies to a certain extent affected the region's economic growth (in fact, this is one of the important factors that widening gap between regional economic);⑤LnPY coefficient is positive and significant that at the present stage, China's regional economic growth had a proliferation. The study also did not consider the endogenous FDI issue, in order to prevent the wrong FDI endogenous control may be the result of error, we introduced tools to re-estimate model variables, the results of regression model 2.7Comparing the model 1.7 results, taking into account the endogenous, the results of the regression coefficient has not changed significantly, but the size factor there have been some changes: GFDI the absolute value of the coefficient increased, which shows that the neglect of FDI naturally underestimate FDI contribution to economic growth.In addition, this paper also estimated 3 models using a panel data method to direct the flexibility of foreign direct investment to the all areas of economic growthThe coefficient of the GFDI of the central and western regions greatly exceeded the eastern part of the estimated value. Since China's FDI shows that the extreme imbalance in geographical distribution, FDI in the central and western regions has more marginal effect to the economic growth, and also shows that the desire for external resources. Finally this paper test the panel integration in the foreign direct investment and economic growth, and further test the panel cointegration test proving that they are among the panel cointegration relationship, that is, long-term balance relations.According to the above empirical results ,the policy recommendations are: (1) On the basis of full using of domestic economic resources and comparative advantages, and actively expand the scale of foreign capital used to drive the force of economic growth; (2) vigorously develop education, cultivate a high-quality labor, and promote the rapid economic growth; (3) Because of its geographical location and man-made policy reasons, China's central and western regions has little to attract foreign direct investment, FDI in such regional imbalances step-by-step increase in the regional imbalance in development. In order to change this regional economic development of non-convergence trend, the state launched a timely manner the western development strategy in the implementation of this grand strategy process, we need to pay full attention to the role of FDI.