Study On The Correlation Between FDI And Regional Economic Growth

Shandong Province is one of the economically developed provinces in the whole country. From 2010 to 2013, its GDP ranked third. In terms of attracting FDI, Shandong is also in the top-ranking. However, every year, most of its share of FDI are concentrated in the eastern coastal area, accounting for about 80% of the total share, while other regions account for only about 20%.This unbalanced distribution more easily leads to the uneven development of Shandong economy. Therefore, the research about the correlation between FDI and Shandong economy can provide a theoretical basis for the co-ordination of regional economic development, and meanwhile, it also can be used as a reference for other provinces.This paper is divided into five chapters. The first chapter mainly introduces the writing background, the significance and literature review, etc; the second chapter mainly explains the definition and related theories; the main contents of the third chapter are the analysis of the current situation of Shandong overall FDI and mainly measures the differences between the Shandong FDI and its economy by Theil index; the main content of the fourth chapter is the empirical analysis of the colleration between FDI and Shandong regional economic growth from two aspects of flow and stock; the main contents of the fifth chapter are the conclusion and policy recommendations made by the conclusion.As the main problem to be solved, firstly, the Theil index is used to measure the distribution difference of Shandong FDI and different degree of Shandong economy by the 20 years relevant data of its prefectural-level city from 1994 to 2013. Based on the difference of the above, from two aspects of flow and stock, using related data separately establishing ECM flow calculation models and panel models for measuring the impact of the stocks based on the Cobb-Douglas function. From the above data and the model, we can get the conclusions: First, the general trend of FDI distribution in Shandong decrease and then increase, whose distribution differences are largely caused by regional differences. Compared with the trend of FDI, the trend of regional economic disparity in Shandong is relatively stable. Second, the impact of the current FDI on economic growth is larger than the one of the lag of FDI on economic growth, and from the whole, the influence of the flow of FDI on Shandong economy gradually decreases from the east to the west. Third, according to the impact of FDI stock in all regions on Shandong economy, the influence of FDI on the economic growth in the eastern is the most obvious, the central less, and the west the minimum, which is consistent with the impact of FDI flows on Shandong economy.Finally, the proposals based on the empirical results are as follows: Firstly, optimizing the utilization of foreign capital distribution structure so as to promote the balanced regional development. Secondly, properly handling the relationship between domestic investment and FDI to promote the balanced development of regional economy. Thirdly, accelerating to promote the development of human resources in mid-western area, and give full play to the comparative advantage in human capital. Fourthly, attracting FDI by accelerating innovative strategies.