Foreign Direct Investment And The Shandong Provincial Foreign Trade And Correlation Analysis And Empirical Research

Since the implement of our reform and opening policy, the scale and amount that Shandong Province absorbs foreign direct investment (FDI) and its foreign trade have been increasing, so the effect of FDI and foreign trade on the economy is becoming more and more obvious. Then it becomes very important to study the relation between FDI and foreign trade, and is helpful to the government of Shandong Province in making policies of absorbing FDI.First, this paper reviews the relative references home and abroad on the relation between FDI and trade. Second, using the data of FDI and foreign trade of Shandong Province, this paper performs empirical tests of the relation between FDI and foreign trade through cointegration theory and Granger causality tests. The results show that in the long run FDI has steady positive correlation with foreign trade, and FDI of Shandong Province has bilateral Granger causality with import, that is, the inflow of FDI increases the import of Shandong Province and the increase of import can absorb more FDI. But FDI only has unilateral Granger causality with export, that is, FDI is the Granger causality of export and export is not the Granger causality of FDI, which indicate the export of Shandong Province at present is investment-oriented. Third, with the theory of the active effect of FDI on foreign trade, this paper analyzes the effect of FDI on the expansion of foreign trade scale, the optimizing of foreign trade pattern and the improvement of exports' international competition of Shandong Province.At last, this paper points out the problems now existing in the process of FDI accelerating foreign trade of Shandong Province and brings forward relative policies of and suggestion on how to exert the effect of FDI on foreign trade in the after-transitional period of WTO.