The Comparative Analysis Of Economic Effects Of FDI Among The China's Regions

With deep development of economic globalization, China is the second largest country in terms of foreign direct investment in the world. FDI has become one of the factors of promoting economic growth. Therefore, FDI has been a hot point of study for numerous experts and scholars.However, FDI affects China's economy in many different ways. Furthermore, FDI isn't distributed uniformly in China's all regions. It causes that there are significant differences of economic effect of FDI among the regions. Therefore, the purpose of this study is a comparative analysis of economic effects of inter-regional FDI.Based on the welfare economics theory this paper takes the production means and consumption means as the two main lines to study the economic effects of FDI. The C-D expanded model and the welfare expanded model of the consumption function are used to derive action mechanism of FDI. And then it arrives at a conclusion that economic effects of FDI include output effect, elements effect, consumption effect, income effect and import and export effect. So indicator system of economic effects of FDI is built. And then indicators of economic effects of FDI are comparatively analysed on the basis of eight economic regions. Analytical results indicate that FDI are mainly brought in the eastern coastal areas, the northern coast areas and the southern coast areas. And the average annual rate of regional FDI growth is decreased in order of the middle reaches of the Yellow River and the southwestern areas. Meanwhile, other indicators are significantly different in system of economic effects.To further quantizing analyze regional differences of economic effects of FDI among eight zones, the regression analysis of economic effect of FDI in every region is respectively carried out by the econometric method of panel data model.The regression analysis results shows the economic performance responses of regions to FDI are significantly different. The effects of FDI on output decrease in order of the northern coast areas, the eastern coastal areas. The elements effect of FDI includes the capital effect and employment effect. The responses of FDI in the middle reaches areas of the Yangtze River to capital crowding-in-effects are the most obvious. The effects of FDI on employment decrease in order of the middle reaches areas of the Yangtze River, the southern coast areas. The FDI effect on income is most in the northern coast areas decreasing in order of the middle reaches areas of the Yangtze River, the southern coast areas, the northwest areas. The FDI effect on consumption is most in the middle reaches of the Yellow River. The effects of FDI on import and export decrease in order of the northern coast areas, the middle reaches areas of the Yangtze River.The implications for policies on the introduction of foreign capital is as following:Firstly,that whether or not to bring in FDI should be objectively evaluated to avoid the blind attraction of foreign investments. Secondly, in accordance with the various regional conditions FDI for specific projects should be properly absorbed to balance economic growth of all regions.