Qingdao Municipal Foreign Efficiency Change Analysis

This article is an analysis on the fluctuation in last 20 years of foreign directinvestment efficiency in Qingdao.After a brief review on historical background of Qingdao's utilizing foreigndirect investment and relative fields, this article introduces a new index, so-calledIncremental Real-Utilized FDI-Output Ratio, IFOR. The index is the ratio betweenincremental foreign direct investment and incremental GDP, and it can beexplained by (1) the difference between the growth rate of FDI and GDP, and (2)the change of capital-labor ratio.Factors that influence these variables can be divided into two kinds: thesubjective factors and the objective factors. The former contains mainly policies,strategies of government and number of labor-force in foreign-invested companies,while the latter contains mainly world economic cycle, national macroeconomicpolicy and the effect of agent organizations. On this basis, it is necessary to lowercapital-labor ratio, in order to enhance investment efficiency. Because of thesignificant contribution of foreign investment to the development of society andeconomy, it is ought to enlarge the amount of foreign investment. So, according tothis precondition, the growth rate of labor-force should be higher than the one offoreign investment. On the other hand, technology advancement should also beencouraged, while capital deepening may not cause the decline of investmentefficiency.Thus, in order to solve the problem of the decline of foreign investmentefficiency, we should mainly start from following points: to enhance the amountand quality of utilizing foreign investment, to improve the efficiency of utilizingforeign investment, and to promote the increase of labor resources.