The Analysis Of Government Policy, FDI And Regional Differences In Economic Growth In China

Since its adoption of the reform and opening up policy in 1979, China has established regional oriented opening up policy and gradually reformed the economic system. With the deepening of reform, the regions and fields related to policy reform are gradually expanded, and the policy is significantly different from regions. Inter-regional differences of policy impact on the scale and distribution of FDI, as well as the regional imbalance in economic development. In the open economic environment, the objective and rational researches on the policy to attract FDI, and government policy, and FDI's impact on China's regional economic growth, are of a great theoretical and practical Significance in policy reform as well as coordinated development of regional economy.In this paper, combined with China's policy reform and development, we measure government policy from three aspects: foreign-related preferential policy and market reform, as well as fiscal decentralisation. By comparing the use of FDI and china's reform process, we find their consistency in both time and space. On this basis, we use provincial panel data to establish an empirical model to inspect the dynamic and regional effect of government policies, economic environment and other factors on FDI.The results show that foreign-related preferential policy, market-oriented reform are of great impact on FDI, and to economic environmental factors like economy scale, the effect of policy is decreasing, which has the characteristics of dynamic time lag and regional differences. The effect of foreign-related preferential policy in the central and western regions is greater than in the eastern region, but the effect of market-oriented reform is greater in eastern than the central and western regions.As well, on the basis of Feder model,this paper build a theoretical model used in analysis of government policies's impact on economic growth and regional differences through FDI, and build a set of simultaneous equations for the empirical analysis. The results show that FDI and policy play significant roles in China's economic growth. As well, policy has different effects in different regions,foreign-related preferential policy and market-oriented reform have a greater impact on economic growth in the eastern part than in the central and western regions. As a result, the new corporate income tax reform and the promotion of market-oriented reforms in central and western regions will be beneficial to adjusting the imbalance in regional economic development.