The Effects Of FDI On The Economic Growth Of Jiangsu Province

The country implementing the policy of opening up is eagerly looking forwardto spurring national economic growth through attracting foreign direct investment(FDI). Jiangsu Province obtains plenty of resources，advantageous geographicallocation and cheap labor and its potential market is huge. With the expansion of theforeign investment and more regulations， Jiangsu will be involved into theinternational trade.China has become the nation with the largest inflow of FDIamong the developing nations. It has continuous9years of actual use of foreigncapital leading national. Investment stimulate economic growth, FDI is not only akind of capital, but also a source of technological advancement for host country.Economic growth difference and FDI distribution inequality problem exists amongthe north, middle and south Jiangsu.Under the theoretical and realistic basis, the central topic in this paper is obvious,with continuous transformation and growth in Jiangsu, what roles FDI would play. Tobe specifically, the questions we tried to answer in this paper were,(1)Would FDIaccelerate domestic capital accumulation?(2)Would FDI do a postive effect onTFP?(3)Compared to domestic capital, was FDI very special for economic growth?This paper has five chapters. In the first chapter, this paper describes the maincontents. The second chapter summarizes the relevant theories about FDI.The chapter3deduces a theoretical model.The chapter4shows the development of FDI in Jiangsu.This province is an unbalanced developing area that different regions have differentadvantages and disadvantages, conducted a series of empirical tests to further analysesthe relationship between FDI,domestic capital and TFP with economic growth. Thechapter5is conclusions and implications.The conclusion is that FDI after entering the Chinese domestic driving their owncapital, for domestic investment have "squash" effect, the growth of China’s economyso as to play a "catalyst" action. What’s more, the domestic capital to the economicgrowth has had the obvious and substantial influence, and FDI as "investment" directly contributes to economic growth than domestic capital has stronger effect,almost1.5times.