Fdi Inflows And Economic Growth In China The Relationship Between Empirical Research

Since China started establishing a series of policies to absorb the foreign direct investments(FDI) in 1979,our country walked through an unusual and rapid road to develop and absorb the FDI .China had overstepped American and became the biggest country which the most amount of FDI flowed into in 2002. In the last few years, the relationship between FDI and economic growth has become the hot spot that both the domestic and international academic circles concern. The research of the relationship between FDI and economic growth will ensure us to know clearly what role the FDI play in economic growth and help the government take the right measures and make policies accordingly. Exactly because of the above points, this paper makes a positive analysis of relationship between FDI and economic growthThis paper concerns several main factors which effect the GDP ,and establish the Vector Error Correction Model by selecting five indexes from the investment, consume, the import and export. The paper distinguishes between FDI and domestic investment ,and use the method of Impulse Response Function and Variance Decomposition to analyze the specific role which the FDI play in the economic growth and its function in the economical growth. This paper is divided into primarily below four parts:The first part introduces some theories related to FDI and economic growth ,the amount of FDI which flowed into China and general situation about the economic growth during 1983-2001 ,and the present research into the relationship between FDI and economic growth in both domestic and foreign academic circles.The second part is a introduction to methods and models : Vector Autoregression, the cointegration of Vector Autoregression, and Impulse Response Function and Variance Decomposition, which is on the basis of Vector Autoregression.The third part is the positive analysis .The following aspects are included: The test of causality between FDI and economic growth ,the establishment of Vector Error Correction Model, and the analysis of the degree to which the indexes of investment, consume, export effect the GDP.The fourth part is conclusions and suggestions about policy. Summary are made on the basis of the positive analysis and personal viewpoints are put forward.