Research On The Foreign Direct Investment Spillovers And Economic Growth Of Pearl River Delta

The foreign direct investment (FDI) flows into China too much since the Reform andOpening-up was born. The FDI not only greatly promotes China’s economic growth directly,but also the FDI spillovers affects all directions of economic development of China andbecomes an important cause to promote long-term ecomomic growth. With the study of FDIgradually deepening, the importance of FDI spillovers attracts too much attention from thewhole society. Using FDI spillovers to promote economic growth has also become an importantobjective for China to attract foreign investment. In this paper, we use the Pearl River Delta asthe research object to study the relationship between FDI spillovers and economic growth.Based on the international direct investment theories, the investment location theories, thetheories of developing countries bringing in FDI and the economic growth theories, this paperfirstly analyzes of the connotation of FDI spillovers and the mechanism of FDI spillovers toeconomic growth, then analyzes the structure of FDI and economic growth in PRD and therelationship between FDI spillovers and economic growth, next analyzes the relationshipthrough empirical study. In the empirical analysis, FDI spillovers are divided into investmentspillover, human resource spillover, technology spillover and trade spillover.The empirical results show that, for the whole of PRD, FDI not only contributes toeconomic growth directly, but has investment, technology and trade spillovers to promoteeconomic growth indirectly. Except the human resource spillover, the investment, technologyand trade spillovers granger cause economic growth and vice verse. For the cities in PRD, theinvestment and trade spillovers granger cause economic growth and vice verse, the humanresource and technology spillovers granger cause economic growth but not vice verse. Whetherthe FDI spillovers exist is greatly related to the location and the level of economic developmentof one city. The effect of FDI spillovers of coastal cities is much stronger than that of inlandcities in PRD.Finally, to further bring in FDI to promote economic growth for PRD, we should furtherimprove the investment environment, expand the scale of foreign investment and enhance thelevel of bringing in foreign capital; strengthen inland cities to bring in foreign capital and guideFDI flows into suitable industries; implement human resources strategy and improve the levelof human capital; increase investment in scientific research and technological transformation,improve the construction of innovation system and speed up technological progress.