The Research On Different Wefare Effect Of Foreign And Domestic Investment

Since 2001, China’s accession to WTO,domestic and foreign investment have been expanding. But residents’ welfare has not been a corresponding increase. And there are differences in the improvement of all aspects of residents’ welfare. Therefore, It is important to theoretically and practically significant to study the different residents’ welfare effect of foreign and domestic investment. In this paper, based on Amartya Sen’s view of welfare economics and reference Human Development Index, the residents’ welfare is examined in three dimensions:living standards, education and health. Principal component analysis method is employed for indexing welfare, living standards, education and health. Further more, through the econometric model, respectively from the national, to provincial, to regional and to district difference’s, impact of domestic and foreign investment to the residents’ welfare in the three dimensions. Based on the impact of domestic and foreign investment on the aforementioned dimensions will lead to making an informed policy decisions.The thesis is divided into six parts. The introduction introduces the background, significance, the main content, innovation and limitation of the paper. The second chapter reviews the relevant literature by combining welfare, foreign and domestic investment areas. The third chapter is theoretical analysis. Firstly, comb the theory of welfare economics; Then focuses on welfare economics Amartya Sen’s ideas and the human development index is formed on this basis; thirdly, based on the above theories, the residents’ welfare will be quantified into living, education and health. Finally, through the theoretical model to analyze the impact of foreign and domestic investment on the welfare. It demonstrates that the influence of domestic and foreign investment to the welfare has influence on the economy and the environment, and in turn depend on domestic and foreign investment to living standard, education and health. The fourth chapter is situation analysis. First, from the perspective of the nation, to analyze the total amount and growth of the domestic investment, foreign investment, per capital disposable income, the number of university graduates and total health expenditure. Since the graph indicate upward trend, then we can say domestic investment, and foreign investment area are indicators of welfare fundamentally, but the per capital disposable income fell slightly. Then divided into the East, the Middle and the West to analyze this five indicators. Obviously, there are differences in domestic investment, foreign investment and various aspects of welfare between the East, the Middle and the West. The East is greater then the Middle and the West. However, the gap between the Middle and the West are on a smaller scale of foreign investment. The fifth chapter is empirical analysis section. First, principal component analysis accounted for welfare index, living standard index, education index and health index. Respectively, from the perspective of the country, regional comprising of the East, the Middle and the West to regression analysis. It demonstrates that the domestic investment have greater impact to improve the welfare, and a positive effect on living standard, education and health. Among them, the biggest impact is on education, followed by health and living standard. The impact of foreign investment on the welfare is relatively smaller, where the largest impact on education, the negative impact on health of the country, but health effects of the East and the Middle are not significant. The sixth chapter summarizes the conclusions of the thesis, and made recommendations to improve the welfare.