The Research On FDI’s Influence To Our Economy

As the main way of international capital flows, FDI plays more and more importantrole in the world economy, especially for the developing host countries, FDI’s effect oneconomic development is significant. So far, China has become one of the most populouscountries which absorb foreign direct investment in the world. Foreign direct investmentcan promote the growth of economic. Domestic and international scholars、 governmentare very concern about its mechanism. Firstly this paper make a brief review about therelevant literature. Make the use of financial market efficiency analyzing the direct foreigninvestment effect on economic growth. If the financial market is efficient, it can providemore convenient. For multinational company, increasing FDI’s capital accumulation effect,promoting economic growth; It also can help domestic enterprises to absorb the FDItechnological overflow, improving production efficiency. At the same time, it can reducethe enterprise’s financing cost.play the funcation of FDI’s effect on economic growth. Wecan divided the financial market into the lending market and the stock market because theyhave different efficiency. So we use the time series datas from1993~2009to analyzeChina’s GDP and FDI which based on the correlationtheory of cointegration test andgranger causality test. Through the empirical analysis, we can inspection the relationshipamoung FDI, financial market efficiency and economic growth. The Results show thatFDI can promote the economic growth and with the aid of the financial market, economicgrowth is exert obvious. In particular, relative to the stock market, FDI by higher efficiencyof China’s lending market can promote the economic growth more apparent. Finally,according to the empirical results, the article give some policy Suggestions.