Empirical Study On Foreigen Direct Investment And Economic Growth Of Four Directly Governed City Regions

With reform and opening-up, the huge number of FDI flocking in China has made large impacts on chinese economy. Due to our country's vast territory, there has been a big difference in the flow direction of FDI, and the influence over imbalance of economy increases daily. Considering the geographical position and the state of development, we test the effect of FDI on economic growth in Chongqing, Shanghai, Tianjin, and Beijing, which are the representative of West & East China. Utilizing unit root test, Johansen cointegrating test and vector error correction estimates, we try to find out the relationship between the FDI and the state of development in the 4 cities, and give some advice to shroten the difference between Chongqing and the other 3 directly governed city regions.1.The basic elements of research. In this paper, we study economic level and absorption of FDI of China's four directly governed city regions. At first, we analyze foreign direct investment and economic growth of the four municipalities in the current situation, and through horizontal comparison find the problem; Then starting from the problems identified, we select the four municipalities'data of foreign direct investment and economic growth from 1985 to 2007 to analyze the relationship, and find out the reasons for it; Due to the final results of the above empirical analysis, we could propose some countermeasures. Considering the characterization of the variables, we choose the volume of domestic investment in fixed assets and the actual foreign direct investment to measure the volume of domestic investment and foreign direct investment; we choose a city's per capita GDP and per capita GDP of the country to measure the relative contrast level of development. Considering the characteristics of variables, we logarithmetics the variables and use LNGDP and LNFDI instead of GDP and FDI in order to gain the convenience of study. Then we carry out ADF Test and Johansen Cointegration Test to study the relationship between the foreign direct investment and economic growth municipalities. On the analysis of foreign direct investment, not only considering the amount of GDP and relationship, we would also focus on the funds'diversion of FDI in order to study affect of FDI on the development of industrial economy.2. The basic conclusions of the study. We have got five recapitulative conclusions through above quantitative analysis: (1) In the long term, FDI would promot the economic development of China's four directly governed city regions. (2) The effects of FDI on GDP would be different among the China's four directly governed city regions. (3) There would be diapiric effect of FDI on GDP in China's four directly governed city regions, but effect sizes are very different. (4) The FDI's long-term effects of four municipalities's on the economy would be greater than the short-term one.(5) Chongqing has problem in the small amount of FDI; Tianjin has problem in utilization efficiency of FDI. The other two cities'situation is relatively good, and there is no major problem.3. The main policy recommendations. (1) Chongqing should take actions the suit local circumstances and make the most of its owen advantage to attract foreign investment. (2) Chongqing and Tianjin should improve the investment environment in order to increase the efficiency of FDI. (3) The four directly governed city regions should be adapted to country's new foreign investment policy to encourage foreign capital to invest in high-tech industries, energy saving environmental protection industries, high-end manufacturing and modern service industry. The Government could facilitate these industries and infrastructure investments.