Empirical Research On The Influence Upon Economic Growth By FDI Of Jiangsu Province

As a part of social investment, FDI has being a hot spot of research by scholarsfor its vital effects on economic growth. Such research analyzed the relationshipbetween FDI and economic growth with different prospective and functionmechanism, and came up with massive relative theories. China has became thebiggest foreign capital inflow country among all under-developed countries, thus, theanalysis of such topic could be more important and practical.Jiangsu Province, as a big economic province of China, shares a leading role onboth the scale of GDP and the level of FDI inflows. Putting detailed study on thefunction mechanism of FDI through capital accumulation effects and technicalprogress effects, is important and providing a relative reference to the other provincesand districts of China.The paper reviewed the relative theory on FDI and economic growth, and lookedinto the present essays about the relationship between FDI and economic growth.Among them, most articles concluded that there was a positive effect upon economicgrowth by FDI, and confirmed that FDI made up the ‘Dual Gap’ of net investment andnet export; meanwhile, some papers were mainly focused on the technology overflowaccompanied with multi-country enterprises, and measured its direction andmagnitude by empirical research.Based on the existing research, the thesis, firstly, stated FDI’s capitalaccumulation effect and technology progress effect on the economic growth, andfurthermore, separated the technology progress into technology upgrade andtechnology overflow. Then, respectively set up two relative production functionsaccording to Cobb-Douglas function, after that, by using the statistic data of Jiangsuduring1991to2010, the paper inspected the contribution on Jiangsu economicgrowth by FDI’s capital accumulation and technology progress empirically.The study demonstrated that FDI’s inflow played a positive role in promoting theJiangsu economic growth through accumulation of capital; in technology progresseffect, due to an offset to the negative effect in technology overflow by technologyupgrade, it drove the regional economic growth by total progress effect at certainextents.