China's Fdi Spillovers Regional Differences

A large number of studies show that, foreign direct investment (FDI) canpromote the host country's economy growth significantly, and the FDI spillover effectis the direct motive force to promote the economic. After30years of reform andopening up, China's economy has been developing rapidly, and has become theworld's largest foreign capital inflow area. The main purpose of our countryintroducing foreign direct investment is to make full use of spillover effects of FDI topromote economic development well and fast in order to achieve common prosperity.Since the reform and opening up, great numbers of FDI inflow to China, not onlypromoted the rapid growth of Chinese economy, but also aggravate our country'sunbalanced development of regional economy. The inflow of foreign capital andeconomic development is higher in the eastern developed areas for a very long time,while the majority of central and western region, even some of the eastern area arerelatively backward. With the continuous deepening of opening up, China'sconnection with international economy is increasingly close, the gap of economic isalso gradually reduced, so the relationship between spillover effect of FDI and China'sregional economic development have also changed. How to realize economicsustainable and rapid development of economy has become the key-point. So, what'sthe difference between the spillover effects of FDI in China's different areas? Whichfactor can influence spillover effect of FDI, and how these factors influence thespillover effect of FDI? Based on the above issues, this article analysis China'sdifferent region's spillover effect of FDI, and do research on the relationship betweenthese factors and the spillover effect of FDI.This paper adopts the method of combining theory with empirical to analysis thedifference of the spillover effects of FDI among the eastern,central,western areas inchina, and analysis how related factors influence the spillover effect of FDI? Thispaper first gives the definition to spillover effect of FDI, and how spillover effect ofFDI influence the host country, and do a theoretically elaborate about what factorsinfluence the spillover effect of FDI. Then, this paper focus more on the empiricalstudy on spillover effects of FDI's regional differences, from the angle of staticanalysis and dynamic analysis to do empirical analysis on the difference of thespillover effects of FDI among the eastern,central,western areas in China, and howrelated factors influence the spillover effect of FDI. After the research, the paperdraws the following conclusion: it is no doubt that the FDI can pass through thepositive spillover effect to promote the growth of regional economy, there is adifference spillover effects of FDI in China among eastern,central,western areas, butthe gap is narrowing. Spillover effect of FDI in the eastern developed regions, have astable development. The center and west regions are in the situation of a rapiddevelopment. In addition, in the spillover effects of FDI's relative factors, spillovereffect of FDI is affected by level of progress of our country economy, open degree,infrastructure construction scale, human resources, market competition, the softenvironment for investment and technology gap. Finally, this paper Give suggestionson the further development of spillover effect of FDI in our country: continue toexpand opening, accelerate the development level of local economy, pay attention to the cultural development of science and technology especially the cultivation ofhuman resources, increase the construction of infrastructure and promote thecompetition of the market.