Research On The Impact Of Capital Flow On Regional Economic Difference In Shandong Province

Regional economic difference is an objective truth, but also the objective laws of economic development. From the actual situation in Shandong Province, the eastern areas had sustained high-speed development by virtue of its geographical advantage and policies.But there are clear gaps between eastern and western areas, or between regions, or between urban and rural areas.The expansion of these gaps will impact the improvement of overall economic of Shandong Province.To begin with, author exerts five aspects including twenty-three indexes which relate to productivity level of development, the level of capital accumulation, the people's quality of life, the level of science and technology and infrastructure,and analyze regional economic difference of Shandong province in 2007. According to the cluster analysis,author divides seventeen cities into four kinds:the first kind includes jinan and qingdao;the second kind includes Yantai, Weifang, Zibo, Linyi, Tai'an , Jining, Weihai and Rizhao;the third kind includes Dezhou, Dongying, Laiwu, Binzhou, and Zaozhuang;the last kind includes Liaocheng and Heze. Furthermore, author analyses four region's characters based on above sort.Secondly, this paper select five indicators to reflect the capital flows of Shandong Province. Through collecting data from 1994 to 2008 of seventeen cities, author makes a detailed analysis of the changes in capital flows by charts ,and analyze the reasons for the trend. From the results of the analysis, the capital flows significantly more active in the higher gradient region.Thirdly, based on the econometric model, author makes empirical testing and analysis of impact of capital flow on regional economic difference in Shandong Province. The model of empirical analysis is a linear regression, and quantitative analysis methods used are unit root test and cointegration test: variables are the five indicators of capital flow, dependent variable is GDP.Through setting up more than one linear regression models in every gradient, the author concluds: (1)In terms of capital flow, the main factors which improve the economic growth in every gradient are different: the first area is foreign direct investment, the second area is the loans of financial institutions, the third area is the financial transfer payment and loans of financial institutions, the fourth area is loans of financial institutions. Relatively speaking, the loans of financial institutions have much positive effect on GDP, especially in the second and four gradient.(2) Each item of Capital flow has different impact on GDP in every gradient:on the whole, the foreign direct investment has the smallest positive effect, followed by fixed asset investment, and loans of financial institutions has the largest positive effect on GDP.Finally, in view of the reality of the situation in Shandong Province, the author puts forward policy and recommendations to guide capital flow to promote the coordinated development of regional economic. Includes:(1) Foster capital market, improve bank financing mechanism,improve the quality of credit, improve the investment environment, control scale of foreign capital reasonably, improve utilization level of foreign capital, and make the construction of Qingdao as a regional financial center.(2) Adjust the regional taxation policy to eliminate negative impact on economic development of the unfavorable factors in the third and fourth gradient, regulate the system of transfer payments, optimize the structure of financial expenditure in Shandong Province, and implemente financial investment policy aimed at strengthening their own Fund-raising function in the third and fourth gradient.