Effect Of FDI And Foreign Trade On Economic Growth Mode

In recent years, problems of utilizing foreign investment and foreign trade areobviously increased in Guangdong and Zhejiang Province. Press from externaleconomic conditions, making the change of the quality and efficiency use of foreigninvestment, foreign trade urgent. Research on economic growth mode, foreigninvestment, foreign trade and other factors impact on the economic growth mode ofGuangdong Province, Zhejiang Province’s will provide a realistic basis.Guangdong Province is the most high density areas in the use of foreign directinvestment. The foreign direct investment has been promoted the economicdevelopment of Guangdong Province a lot. As a frontier of economic reform andopening up, with national policy support and the geographical advantages of close toHong Kong and Macao gained Guangdong Province rapid economic growth and madethe economic structure better. Zhejiang Province owns the advantage of the degree ofopening up. The small and medium size of private enterprises is Zhejiang Province’smain export, and also gathered on the production of labor-intensive products and lowvalue-added. From the perspective of economic growth mode, the two provinces havecommon character on the high consumption of resource and high pollution. Thesituation of getting economic growth through accumulation of factor inputs has left usto confront serious shortage of resources. Also, the rate of technological progresscontribution to economic growth shows not so well, the industrial structure is the lowquality, all these means we need to transform the economic growth mode urgently.However, we can see slow process of change over the years and slight changes ineffect.In this articles, show the brief view of the definition of economic growth and themethods of determine it, analysis the mechanism of how foreign investment, foreigntrade affect economic growth mode. In the mathematics part, first, the articlecalculated the economics growth mode of Guangdong and Zhejiang provinces byquantitative analysis which is the Cobb-Douglas production function. Then used panelmodel, analyzed the effect of FDI and foreign trade on economic growth mode withevidence of the1990-2010years in Guangdong and Zhejiang provinces, and made acomparison. Concluded that in the two provinces, effect of foreign investment,foreign trade on economic growth mode are both positive. The use of FDI influenced on economic growth is more significant in Guangdong Province than in ZhejiangProvince, the foreign trade impacted on economic growth mode is more pronouncedin Zhejiang Province than in Guangdong. At last, the article summarized all the theoryand mathematics analyze, and provide relative suggestions.