Comparative Analysis Of FDI’s Influences On GDP In China And India

Economic globalization is a developing trend of the world now,and the capital is flowing more frequently among the world. Foreign direct investment will encourage all kinds of resources to deploy within the world range more effective. The FDI will promote economic growth of the capital inflow countries and adjust the structure of industry, therefor all the countries around the world, especially developing countries formulate many policies to attract FDI. Many economists have been studying the FDI decision theory and have achieved many achievements. China and India are two major developing countries in the world. From the past twenty90’s of centuries, China and India adopted the policy of attracting the FDI energetically; they make every effort to draw support from FDI accelerating economic growth. The two countries have many similar characters in many aspects,but the difference between them is big. For example the quality of FDI, domestic distribution and the industry of FDI.This paper is constituted by six parts. The first chapter is a general introduction. It mainly introduces background, destination and meaning of the study. It also introduces the method, innovations and shortcomings of the study. In the second chapter, it collects many studiers achievements and summarizes FDI theories, the comparison of China and India in attracting FDI and FDI’s influences to a country’s economic. The third chapter mainly compares the present situation of attracting FDI, including the inflows, sources, industry,and ways of the investment. In the forth part, it uses econometric model for empirical analysis. Firstly we use least square method for regression analysis, then we make co-integration analysis and granger causality test to testify the relative of GDP and FDI. Lastly, we get a conclusion. In the fifth part we analyze the reasons leading to the different result of China and India using FDI to encourage the economic development. In the last chapter, we put forward some policy recommendations according to India’s experiences.