| Since the 1960s, FDI has developed quickly and become the main trend of world economy. The World Investment Report in 1992 published by MNC (Multi-national Corporation) of UN puts forward for the first time that FDI has become the engine of world economic development. Especially after the 1990s, FDI plays a more and more important role. As the main method of international capital flow, FDI (foreign direct investment) is drawing more and more attention of researchers at home and abroad as it plays a more important role in the economy of host countries. Entering more fields of national economy, FDI plays a more important role in our economy and influences all parts of the economy. Since the reform and opening up, Shandong Province has gained much experience and also met a lot of problems in its practice of attracting foreign funds. Regarding the role of FDI in our economy and the role of Shandong economy in the national economy, it is necessary to analyze the mechanism and effects of FDI and give suggestions accordingly.This essay takes the method of theoretic analysis and empirical research and analyzes the mechanism and effects of FDI and give suggestions. Firstly, based on the previous researches at home and abroad, this essay gives an introduction of theories related with economic growth. Secondly, there is an introduction and analysis of the history of attracting FDI in Shandong Province. Thirdly, based on the practice of attracting FDI, this essay makes a framework of FDI affecting economic growth ,that is FDIâ†'economic growth, FDIâ†'capital formationâ†'economic growth, FDIâ†'technology upgradeâ†'economic growth. Fourthly, this essay forms an econometric model and verifies the framework of FDI, capital formation and economic growth. The verification begins from direct effect of FDI on economic growth, follows by the indirect effects capital formation and technology update. At last, this essay gives reasonable suggestions as regards to how to attract and make good use of FDI. |
PDF Full Text Request