An Empirical Study On Influence Of FDI On Yancheng Economic Growth

With the deepening of international labor division and fast development of economic globalization, opening up to the outside world is more and more important for a country's economy and FDI is playing a more and more important role in its extrovert economy. FDI is one of the important factors which influence the global economic growth.FDI has an great effect on domestic investment, employment, technology progress, and export trade, balance of payment, etc.Scientific research and estimation of the impact of FDI on local economy is an important issue for economics.Since the reform and opening policy issued, Yancheng ,as one of the coastal cities of Jiangsu Province,has been increasingly attracted and taken advantage of the FDI,whose quality has been improving. Yancheng City has actively followed the national strategy of all-sidedness, multilayer and broad fields by largely expanding the introduction of foreign capitals and guiding the directions of their investment. As a result of it, the pace of foreign capitals' utilization has been evidently quickened and Yancheng economy has been developing along a track of sustained speedy and steady manners. After China joining WTO and with the rapid development of Jiangsu coastal area,the Yancheng City attraction FDI faces the new opportunity.Under this kind of background,we not only should understand deeply the level of economic development and the state of FDI in Yancheng City.but also need to analyze the relationship between economic growth and FDI,study systematically how FDI influences the economic growth to give some empirical supports and help to the adjustment of the policy of absorbing foreign capital in the future.This thesis defines the concept of FDI and economic growth. After studying the interrelated literatures, the author analyses present situation and structure feature of absorbing foreign capital in aspects of foreign capitals' scale, form, origin sector, region, investment allocation by industry, and investment environment, by using time sequential data from statistical data (1987-2007) of Yancheng City, which based on the basic theory of FDI and economic growth. Basing on analysis of FDI structure features, and combining with existing research achievement, the thesis absorbs an appliese fective positivistre search methods and discusses the extensive influence on Yancheng economic increase of FDI, by using analysis result and metric searches. Through the study of the imported foreign capital of Yancheng City since 1990, there is a long-term stable relationship between FDI and economic growth according to the cointegration analysis and Error Correction Model(ECM), and it is found that Granger Causality exists through Granger Causality test. Then, by using linear regression, statistical analysis was done on the time series data of some indicators of economic growth in Yancheng City,such as external trade development,industry total production value and whole social fixed assets investment, to get real economic result of FDI in Yancheng City.At last, summarizing and some suggestions on how Yancheng City should bring in and use FDI reasonably are given on the basis of the analysis result.