Researches On Relation Between Foreign Capital Utilization And Economic Growth In Anhui Province

The trend of globalization has led to the international capital movement, and with the regional economic union soaring, the transactions on economy among nations are improving both in breadth and depth. The development of economic globalization has created many opportunities for our country to integrate into international market. Consequently, our country should seize the opportunities to accelerate regional economic development. Since the reform and opening policy, foreign capital utilization has been the main content of socialist market economic construction and the inflowing foreign capital provides us with a good economic development environment. Due to the improving investing environment and market, our country is becoming the most attractive one to foreign capital.The introduction of foreign capital not only refreshes the economy of Anhui province but also brings advanced technology and management experience, which can compensate for shortage of capital in Anhui province and make a great contribution to its economic growth. Since 1990s, foreign capital utilization has gradually become a new economic growth point in Anhui province.(1) This paper presents the current situation and existing problems on the basis of analyzing the pattern and development process of foreign capital utilization in Anhui province. In the scale of foreign capital utilization, the total size is expanding, and the gap between Anhui province and the coastal and other developed areas is gradually reduced; In the form of foreign capital utilization, Anhui province lives by foreign direct investments, but the proportion is lower than the national average; In regional distribution, it's imbalanced and mainly concentrated in Hefei, Wuhu, Ma'anshan and other cities; In industrial distribution, its primary industry is relatively backward and foreign capital mainly flows into the secondary industry concentrated in manufacturing, electricity and gas industry, while the services sector of tertiary industry absorbs more foreign capital in Anhui province. From that listed above, we get a conclusion that the imbalance of foreign capital utilization of Anhui province appears more serious. Therefore, this problem will remain the major task in the coming period in order to achieve rapid economic growth.(2) The economic effects on foreign capital utilization in Anhui Province are mainly analyzed. The first is technology diffusion effect, including imitation and demonstration effect, employment effects and spillovers effect under competitive pressure. The second is employment effect, which means that foreign capital utilization created numbers of jobs directly and indirectly, and using foreign capital has greatly improved the quality of employment. The third is the trade effect including direct export effect and indirect driven effect.(3) The data of foreign capital and GDP from 1998-2009 are included in this article, and the relationship between foreign capital utilization and economic growth is explored by means of regression analysis based on this data. Then we get a conclusion that effective utilization of foreign capital can positively improve economic growth of Anhui province.(4) Some good advices on making full use of foreign capital of Anhui Province are provided. The one is to form the basic idea of foreign capital utilization in "Twelve Five" period of economic restructuring in Anhui Province, which includes making full use of foreign capital to develop modern agriculture actively, promoting national regional industry vigorously, fostering high-tech industries and accelerating the development of service industry. The other is to propose the basic idea of improving its economic growth with foreign capital utilization including following aspects, to regulate where the foreign capital is invested; to optimize the pattern and quality of investment; to and attract foreign capital; to improve the investment environment and complete the regulations and policies; to make good use of its advantages to promote its competition and improve efficiency of foreign capital utilization of government.