Empirical Analysis Of China's Foreign Direct Investment Affect Factors

As an important means of product internationalization and deepening of international specialization, foreign direct investment is becoming one of the most important economic powers in the world increasingly. Much overseas research indicates that not only it can affect host country's economic growth as a type of complementary capital, but also its technological spillover effect is the great reason why the host country wants to fetch FDI in.After China's Reform and Opening-up, the rate of absorbing FDI reaches at 26.6% every year, and its scale is growing larger and larger. How to judge of the effect that FDI impacts on technological progress in China is turning into a hotspot of the research of FDI.This thesis tries to make my own explanation for this controversy. Firstly, it defines the meanings of technology, technological progress and technological spillover effect basing on the review of research results about the specialists all over the world. Secondly, FDI variable is introduced to the framework of economic growth theory and its influence to China's economic growth is analyzed in both theoretical and positive ways. We find that the effect of Foreign Direct Investment over China's Economic Growth should be divided into two parts: capital effect and technological spillover effect. Further more, we study the causality between foreign direct investment and other factors accelerating economic growth by Granger causality analysis, and educe the mechanism how foreign direct investment influences China's technological progress. Finally, the conclusions and the policy suggestions about the utility of FDI in China are made.The innovation of this thesis is as follow. The first one is that FDI, as not apart of capital but an unattached variable, is introduced into the model of economic growth. The second one is that total factor productivity is divided into several sections. The causality between FDI and each section is analyzed and the mechanism how foreign direct invest investment influences China's technological progress is found. The third one is that institutional change is regarded as important way for FDI to influence China's technological progress.