An Empirical Research On The Fiscal Expenditure Structure Of The Local Government And The Relationship Between FDI

In the wave of the economic globalization, the flowing speed of internationalcapital accelerates, and its scope is expanding, but the geographical distribution isunequal. China has been the largest developing country in attracting foreign directinvestment(FDI) since1990s, FDI has gradually became an important means ofdeveloping economy and promoting Sino-foreign economic and trade exchanges. Asone of the main inflow areas of foreign investment in China, the actual use of FDI inJiangsu has became the first in all the country. Therefore, to study the case of FDI inJiangsu Province is typical to bring referential significance to those provinces whoseeconomy is relatively backward. Secondly, we can conclude that FDI has internalstructural problems in Jiangsu by analyzing its differences in southern, middle andnorthern region, and then make suggestions. It can also make economic developmentin Jiangsu more comprehensive and balanced.This paper is based on a review of previous studies, and through a combinationof descriptive statistics and empirical analysis, and based on the perspective ofcomparative analysis. The paper mainly analyzes the relationship between fiscalexpenditure structure and FDI in Jiangsu Province as well as the regional sectors fromthe microscopic point. This paper first describes the location choice theory of FDI andthe relationship between fiscal expenditure structure, investment environment andFDI, and then analyze the key role of FDI in the economic development of JiangsuProvince. Then, the paper analyzes that the institutional incentive of FDI hasgradually changed from tax preference to the improvement of fiscal expenditurestructure from the perspective of institutional economics. Then, the author makes ananalysis of present situation of FDI from the growth of scale, investment methods,regional sources, industrial structure and trade constitutions. On this basis, the papertakes the data of63municipal districts of Jiangsu Province, regional and county-levelcities from2007to2010as the sample, then makes the empirical analysis. The mainindicators are: tax incentives, public service expenditures such as education, healthcare, social security, road density, per capita GDP, the level of import and export trade,and institutional factors. The conclusion of the analysis is as follows: the role of taxincentives in attracting FDI is weakening, the role of public service expenditures toattract FDI is enhancing, transportation infrastructure has no significant relationshipwith FDI, the level of import and export trade is still an important factor in attractingFDI. In the final chapter, the author makes a summary to the paper and puts forwardrelevant policy suggestions based on the description of the statistical results and theempirical results.