An Empirical Analysis On The Relation Between China's Foreign Direct Investment And Economic Growth

Since reform and opening up,as the main form of international capital flows,foreign direct investment(FDI) has been playing an increasingly important role in the world economy,especially in the economy of developing countries.With an unprecedented rate in the development,China has become one of the countries which hold the most FDI.In 2002,China surpassed the United States and became the world's largest attracting capital nation.What is the relationship between FDI and economic growth has been concerned by domestic and foreign scholars.Based on the research results at home and abroad,the paper adopted the qualitative analysis combined with quantitative analysis,and horizontal analysis combined with vertical analysis.With modern statistical methods,it analyzed the location factors between FDI and economic growth,and a comparative analysis of China and other countries such as similarities and differences in FDI and economic growth was also worked out.Adopting econometric analysis,we have got the conductive effect and also the long-run equilibrium and short-term dynamics between FDI and China's economic growth.Through the cointegration test we knew that there is long-term stable relationship between the two, and the impulse response analysis in the model VAR of the conductive path showed us time-delay effect.At last,the results showed that:for the basic economic factor,there is a gap between China and all the developed and some developing countries;for the economic input factor,China ranks the last place;but for the economic potential factor, china is ahead of other developing countries.The utilization of FDI in China could promote economic growth through trade promotion effects,human capital effect and technical effect,but because of the characteristics of the various effects,their own effects may play different time-delay.