Influences Of FDI On Income Distribution In China

As the scope of foreign direct investment (FDI) in China is expanding continuously, the gap of the income distribution of our residents becomes wider. The eastern part of China absorbs over 85% of FDI of the whole country, whereas most of the middle and western parts absorb a very small portion. Undoubtedly, the regional disparity of FDI will bring different impact to our regional economic development and income distribution. Therefore, the deeper study of how FDI influences the income distribution of Chinese residents has profound significance to narrow the gap of income distribution.On the basis of an overview of the theoretical analyses and empirical researches of the influence of FDI on host countries by scholars both at home and abroad, from such aspects as employment effect, technological spillover, element flow, and driven by trade, the thesis makes a deep analysis of the ways in which FDI influences our income distribution. And by using econometric models, the thesis also makes an empirical analysis of the influence of FDI respectively on the income distribution of the whole country, between the eastern, middle and western parts, and within each part, and gets the result that the regional disparity of FDI widens the income gap of the whole country, between the middle and western parts, and within the two parts, but the influence of FDI on the income distribution of the eastern part shows a good development tendency. Accordingly, the thesis puts forward that while leading the grads transfer of FDI to the middle and western parts, China should continue to strengthen the absorption of FDI in the eastern part. And through policy guidance, the distribution of FDI in different parts and the industrial choice within the regions should be optimized so that FDI can have a good effect on the income distribution of our country.