| Foreign Direct Investment (FDI) plays an increasingly significant role in global economy with deepening of globalization, especially in the economic development of developing countries. In recent years, China keeps such a rapid and sustained economic growth that it becomes the highest economic growth rate as well as one of the most FDI inflow country. The influence of FDI on China’s economy attracts more and more attention of practitioners and scholars.FDI has become one of the most important factors of China economic growth for a long time. Both theoretical and empirical researches find that the role of FDI in economic growth plays in two ways:capital accumulation and technology spillovers. To China’s economy, the role of FDI plays in two levels:first, FDI promotes capital formation of China. Second, China gets advanced technology and management of multinational enterprises by absorbing FDI. FDI makes benign interaction between Chinese enterprises and multinational enterprises thus to promote Chinese enterprises to develop gradually. A lot of theoretical and practical analysis find that technology spillover is restricted by many factors especially the absorbing capacity of host countries. However, in recent years, the process of financial marketization which is one of the restricted factors plays a new role in the field of absorbing FDI for host countries.Related researches interpret that the process of marketization in financial market means a lot to the companies learning and imitating of host countries as well as absorbing FDI, it determines the positive impact of FDI to economic growth. However, the influence of financial market to FDI technology spillovers remains unclear, in the special financial repression market of China whose financial institutions are one part of the government, analyzing the importance of financial marketization progress to the impact of FDI to economic growth plays a significant role to FDI policy and financial reform.This paper, by using provincial panel data from1987to2011, analyzes the impact of the process of marketization in China’s financial market to its FDI on economic growth. It falls into six sections. Section one is introduction of background and theoretical and practical meaning of this paper firstly, and secondly, summarize research ideas, and then explain the methodology, the last points out the innovation and deficiency.Section two is theoretical principle and review of the literatures, it is theory basis of this paper. This section studies the literatures of relationship among FDI, economic growth on the basis of financial marketization of domestic and international research. Such literatures focus on three aspects:①Domestic financial marketization supports the impact of FDI to economic growth;②Weak financial marketization restrains the impact of FDI to economic growth;③Region bias results in different impact of FDI to economic growth.Section three is the present situation of financial marketization progress, FDI and economic growth of China. Firstly, it describes financial marketization progress from the aspects of financial interrelations ratio, business finance, market share of stated owned banks. Then is the analysis of present situation of gross foreign capital and growth rate of FDI, as well as their area distribution. Lastly, by using data and graphs to analyze the economic development from gross GDP and GDP growth ratio and per capita GDP as well as contrast the present economic situation of coastal and inland of China.Section four contributes the theoretical analysis that financial marketization influences the impact of FDI on the economic growth. This paper not only analyzes the function of financial marketization to FDI economic effect but also the importance of advanced finance system to the FDI economic effect by exchange from savings to investment, labor capital movement, R&D innovation thus to raise investment contribution rate. On the basis of qualitative analysis of financial marketization to FDI influence of economic development, the author studies the influence of financial marketization on FDI promoting economic development. By theoretical model, the author finds that financial marketization of host countries plays a decisive role of FDI to economic development. Financial marketization plays an important role in the impact of FDI on the output growth in the domestic departments.Section five is main part of this paper which is empirical analysis of FDI and economic growth. The author discusses the following topics by using provincial panel data, and the result shows that:①China financial marketization progress has negative influence on FDI to economic growth and this influence exits significant structural feature.②Financial marketization progress has different roles in coastal and inland provinces as well as in period of1987to1991,1992to2001and2002to2011.③Both coastal and inland provinces in three periods exist difference of financial marketization progress. At last The author does robustness test of credit market index by using the data of Fan Gang(2011).Section six is the last part of this paper which is conclusion and suggestions. The author suggests from two aspects based on the analysis, increasing the quality of importing FDI and balancing the FDI regions, enhancing direction of importing FDI. Fastening financial marketization progress, differentiating financial market reform, supporting multi level capital market system, expanding financial market actively and safely and change the content and pattern of financial regulation.Innovation of this paper is that:Firstly, it analyzes different financial marketization systematically and constructs financial marketization index by using ratio of non-state owned loan and real GDP based on the condition of China, and then does robustness test; Secondly, it makes comprehensive comparison of area differentiation and time-period difference; Thirdly, it discusses the process of financial marketization threshold of FDI effects. |
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