| The paper is based on former studies and the framework of endogenous growth theory, which proposes three hypothesis about financial development, FDI and manufacturing growth:First, the manufacturing which highly depends on domestic finance, grows faster in a region with more perfect financial markets; Second, for those manufacturing which highly depend on external finance, grow faster in the areas with more intensive FDI investment.The development of financial markets is also able to promote the growth of those manufacturing which highly depend on external finance; Third, since the Chinese financial market is imperfect, for the manufacturing with higher need for external finance,FDI will be able to alleviate the funds shortage of the growth to some extent.The paper uses the data from different years before and after the financial crisis to conduct comparative analysis, at the same time, using Chinese manufacturing data in 2007 and 2011 to test the above hypothesis. From the empirical results, three theoretical hypothesis of this paper has been well verified.First, the research of using China’s industrial economic data, China’s financial development and FDI data in 2007 and 2011 before the financial crisis show that loan financing depended manufacturing increase faster in financial developed areas; foreign investment depended manufacturing increase faster in FDI investment focused areas. By comparing the empirical tests before and after the financial crisis, we find that the impact of financial development on manufacturing growth is more evident after the financial crisis,which indicates that financial development is more important after the financial crisis.Secondly, entry of the FDI has a positive role in promoting manufacturing growth in China.To some extent, it eases the capital shortage and other problems within the industry, while bringing cutting-edge technology for China’s manufacturing growth.Again, for foreign-dependent manufacturing in addition to their funds and financial support provided by foreign multinationals, large amounts of capital is required to finance from financial markets of the host country. Conclusions of this study also proved this point that foreign-dependent manufacturing increases faster in the developed financial markets.This study also provides a experience reference of policy recommendations for invite investment and development of financial markets in various regions of China.First, in the less developed regions for financial markets,we should improve as soon as possible the financial system, encourage financial institutions to improve the convenience of corporate loans, and promote the production investment; secondly, the local government should actively improve the local financial market system while attracting foreign investment. The entry of FDI is not noly in favor of the development of those industries which more highly depend on external finance, but also conducive to ease domestic financing constraints and other issues, and thus conducive to manufacturing growth. |
