Positive Research On FDI's Impact On Economic Development Of Qingdao City

Along with the deepening process of international division of labor and economic globalization, foreign direct investment (FDI) plays more and more important role in promoting economic development. FDI has become a strong engine of persistent economic growth in developing countries. As a coastal open city in China, Qingdao is the city which attracts FDI most in Shandong Province. FDI has already become the significant factor promoting Qingdao's economy. Therefore, the thorough analysis on the relationship between FDI and the economic growth of Qingdao will provide valuable theoretic support for the policy establishment of foreign investment utilization.This paper aims to do research on the specific impact of FDI on the economic growth of Qingdao City. First, this paper chooses the relevant statistical data from 1987 to 2007 to make analysis from four aspects:the total amount, the source structure, the investment way and the industry distribution of FDI. Second, by establishing an econometrics model and using the cointegration test and Granger causality test, this paper makes causal analysis on the relationship between FDI and GDP of Qingdao. In the meantime, this paper makes contrast analysis between domestic investment and FDI of Qingdao. After study, the following conclusions can be drawn:(1) Both domestic investment and FDI produce positive effect on accelerating the economic growth of Qingdao. Domestic investment makes more contribution; (2) There is no long-term balanced relation between the domestic investment and FDI of Qingdao. So it is uncertain whether the "squeeze in effect" or "squeeze out effect" of the FDI on the domestic investment exist. (3) GDP, FDI and the domestic investment of Qingdao have the long-term balanced relations. In the short-term, however, the causality between FDI and GDP is a kind of one-way relationship. In other words, GDP is the reason for the growth of FDI, but FDI is not the reason for the growth of GDP.Based on the analysis result mentioned above, this paper also gives some policy suggestions on enhancing the scale and quality of FDI in Qingdao. These suggestions include:optimizing the investment environment, implementing the diversified utilizing strategy of foreign investment, upgrading the industry structure of FDI, promoting the technology transformation and strengthening the competitive capacity of local enterprises.