The Empirical Study Of Crowding In-Out Effects Of FDI On Domestic Private Investment

Under the condition of fast-growing private capital, the qualitative and quantitative analysis about the influence of FDI on private capital and the understanding of the dynamic relationship between different economic sectors is extremely essential. Furthermore, to explore the utilization of foreign investment policy and the future development of different economic sectors that are suitable for domestic situation, the status quo of region and industry is beneficiary for maximizing advantages and avoiding disadvantages.At the same time, while achieving a high level of opening up and ensuring the dynamic adjustment of private sector and state-owned sector, domestic private capital can be promoted to grow continuously.This paper first defines the concept of FDI, private capital and state-owned capital, then describes the mechanism of the impact of FDI on domestic capital formation. Then when the review about the theoretic and empirical researches on the impact of FDI on domestic capital is done, on the basis of the Absolute Crowing In-Out Model, a econometric model is established, and then an appropriate and effective analytical model for empirical analysis is selected. Furthermore, through the foundation of panel data model and the use of GMM estimation method, empirical research and analysis from regional and industrial level are conducted. And the conclusions are:in the regional level, FDI generated significant crowding-out effects on private capital while state-owned capital crowded in private capital to some extent, where FDI had strong and notable crowding-out effects in the eastern and central region, did not establish an effective association in western region; On the other hand, in the industrial level, the effect of FDI and state-owned capital on private capital was not significant, however from the perspective of industry segments, taking Jiangsu Province as an example, further study indicated that on the surface FDI and state-owned capital showed no obvious crowding-in or crowding-out effect, but essentially it was the overall results of the offesting of all different effects in industry segments.The innovation of this paper is mainly reflected in the expansion of the econometric model which brings private capital, FDI and state-owned capital into a unified measurement to portay the effects of FDI and state-owned capital on private capital more accurately. And the same time, according to the differences in the regional and industrial distribution and in consideration of the dynamic changes in the economic operation,this paper conducts empirical analysis from the angles of region and industry to reflect more comprehensively and systematically the latest results of the effects of FDI and state-owned capital on private capital.