Foreign Direct Investment Empirical Analysis, The Economic Impact Of The Liaoning Province

Liaoning province is one of the most important old industrial bases in northeast, which has made tremendous contributions to China's economic construction. But when Liaoning province faces the changes brought by reform and opening up and faces huge impacts brought by rapid development of the southeast coast new industries and faces the problems inside,there have been some problems out on Liaoning economic development. This has seriously affected the old industrial base's smooth development under the new situation. In 2003, The Party Central Committee raised strategies of the revitalization of the old industrial bases in northeast China, which has provided a new opportunity for the Liaoning provincial economic and social development.Against this background,the paper builded econometric model and used statistical data of Lioa ning province since reform and open policy. In this paper I will study the foreign direct investment's impacts on Liao ning province economy, to find out the law that how does FDI impact on Liao ning province economy, to provide policy recommendations that our province can use to develop a positive and effective policy to attract FDI, that our province can use more and better FDI to compensate for lack of construction funds, that our province can use to promote Liao ning province economic development.This paper summarized correlate FDI's theories and review FDI's iteratures home and abroad, and analysed the present situations of Liao ning province's FDI. At the part of real diagnosis analysis I firstly establishment relative crowding in or crowding out model,use which to analyse FDI's function for investment of Liao ning province. Then adopt VAR to investigate the FDI's impacts which have been put on to our province's GDP,investment, foreign trade and employment and so on. In this part I use cointegration test on the main variables,in order to reveal if there is long-term cointegration relationship between FDI and other variables. Then do Granger Causality test on FDI and other variables,to test if there is causality in sense of Granger on these variables. And analyse when FDI was shocked by one unit positive impact, what changes other variables will happen in impules response function. Then give some reasonable explanations to these changes. Finally use Variance Decompositions to analyse when FDI was shocked by one unit positive impact, what contribution degree will happen to Liao ning province's GDP,investment, foreign trade and employmentThrough real diagnosis analysis the paper draws the most conclusion as: FDI of Liao ning province can obviously produce crowding in effection; The positive impact of FDI of Liao ning province can remarkably draw up our province's economical growth,can promote our province's investment increase,so can speed up our province's development of the foreign trade,but FDI of Liao ning province have almost nothing to do with the growth of employment rate. At the end of the paper I drawed the cnclusions Which can beneit our government's dcision-making of attraction of foreign direct investment.