The Empirical Research On The Relationship Between Fixed Assets Investment And Economic Growth

The economy of Shandong province has made significant achievements since the reform and opening-up; and has been one of the fastest growing economies in national economy, also the economy is in the new period of expansion. Since the latter half of 2006, the fixed assets investment has fell from the peak because of the influence of macro-economic control. Fixed assets investment has played an important role in propelling regional economic growth; however, there are still some problems in investment of Shandong province. Therefore, it is need to make a deep study on the effects caused by fixed assets investment in Shandong province.This paper analyzes the effect of fixed assets investment in the economic growth from both theoretical and empirical perspectives. Firstly, this paper analyzes and summarizes the theory and research that are related to investment and economy growth, which can make theoretic foundations. Secondly, the paper analyses the gross of fixed assets investment and the structure of investment on the basis of macro statistics. The Empirical analysis contains Co-integrate Regression and Granger Causality Test and Error correction model, which are used to analyze the effect of fixed assets investment in the economic growth.The long term balance relationship between fixed assets investment and economic growth shows that the GDP's elasticity is 0.7798, which means that investment adds 1 percent, GDP adds 0.7798 percent; and the short term Error Correction shows that the GDP's elasticity is 0.3319, and if the investment adds 1 percent, GDP adds 0.3319 percent; the Granger Causality Test shows that they have bipartite causality, the Per capita GDP model shows that the contribution of fixed assets to economic growth is 0.6678, and fixed assets investment plays an vital part in driving economic growth.At last, some policy and recommendations for fixed assets investment would be given based on the empirical research above, so that we can confirm the direction and strategy of fixed assets investment in the content of sustainable economic growth.