Comparison Analysis On The Contribution Of Foreign Direct Investment&Export Trade To Economic Growth In Tianjin

As the China’s third largest city, Tianjin lies in the Bohai economic circle, and is thesecond major economic and politic center of the North after Beijing. Since our country’sreforming and opening up, Tianjin’s robust economic development has maintained aleading level in China. With the convenient three-dimensional transportation system andthe initiation of the economic development strategy of “From East to West” and “exportorientation”, Tianjin has been continuously improving its export industry. After WTOaccession, Tianjin has been making full use of its comprehensive functional advantagesto seek international trading partners, to cope with the international financial crisis, andto develop export trade thus driving the economy. It can be said that export, as one of thethree engines driving the national economy, is a powerful catalyst stimulating economicgrowth. Recently, Tianjin Binhai New Area has been incorporated into the overallnational development strategies such as “Eleven Five-Year” and “Twelve Five-Year”,and a large amount of multinational corporations has invaded Binhai New Area with thepreferential policies and the favorable investment environment thus expanding foreigndirect investment (FDI for short) scale and making it a significant force driving theeconomy.Facing the phenomenon that FDI, export trade and economy in Tianjin are growingwith a high speed, it cause the thought that whether export trade or FDI makes morecontribution to Tianjin economy, and the thought that Tianjin government should putmore emphasis on “export-oriented strategy” or on speeding in FDI introduction with theopportunity of the rapid development of Binhai New Area. To solve these problems, it isnecessary to analyze and research comprehensively and systematically the present statusand features of Tianjin export trade and FDI, and their pushing effect on economicgrowth. These would also afford a favor and practical support for Tianjin to make bettereconomic policies, to achieve technology progress and to optimize industrial structure.Based on the review of existing related literatures, this paper firstly introducesrelevant theories about the contribution of foreign direct investment and export trade toeconomic growth, and summarizes the mechanism of FDI and export trade in promoting economic growth, which lays a powerful theoretical foundation for the empirical analysisin the behind. Secondly, with the relevant statistic data after1990, this paper analyzes thecurrent situation and characteristics of Tianjin economy, using FDI and export trade, andmakes comparison analysis on the contribution of FDI and export to economic growth inTianjin from three aspects of aggregation, contribution and pulling power. Thirdly, withthe data from1990to2010and under the guidance of contribution mechanism, this papersets up appropriate model and analyzes empirically the contributions between the FDIand export on economic growth in Tianjin. From co-integration test, it can get theconclusion that there is a long-term stable relationship in FDI, export trade, GDP, capitalstock, employment figures and the increase of technical level. Through the regressionanalysis, it is found that export trade makes more contribution than FDI in stimulatingeconomic growth in Tianjin, but the contribution gap is not that large. According toGranger Causality test, rapid economic growth will accelerate the flow of FDI, and FDIwill in turn promote economic growth thus forming a virtuous circle. However, theincrease of export will stimulate the growth of economy but not vice versa, and it showsthat export increase is more suspect to the international economic situation changes thanFDI. Once the international economic climate is unstable, export trade will be harder hitand therefore could not promote the economic growth. So in order to maintain a stableeconomic growth rate, Tianjin should intensify the introduction of FDI. Ultimately,according to the current status and characteristics of economic development, attractedFDI and export trade in Tianjin and combining empirical analysis results, this paperbrings forward relevant countermeasures and advices on how to help Tianjin economymaintain a steady and rapid development trend.