The Effect Of FDI Quality On Economic Growth In China

With China's economic development,while the rate of growth has continued to decline,the economic growth is slowing down,so it is necessary for our economy to transform.The 18th National Congress of the Communist Party of China put forward to comprehensively deepen reform,we should seize this great opportunity and overcome the factors by economic downturn,promoting the upgrading of our country economy.As a supplement of the domestic capital,FDI is the key to transform the economic development pattern.Recently,the quantities of FDI grow slowly,it is difficult to meet the needs of economic development with variable quality of FDI.What s more,there is a strong appeal to optimize the structure of foreign investment and promote the integrating of the capital attracting,the technology attracting and the talented attracting,so the quality of FDI has attracted scholars attention gradually.Besides,higher quality of FDI can play a better technology spillover effects which will provide a predictor to solve the problems in our economic growth.In the existing research,the relationship between FDI quality and economic growth has been mostly studied from the perspectives of Province or country,the study based on the micro level is less,it is necessary to discuss the two results whether is same.Besides,it is difficult to measure FDI quality,the scholars also use different indicators to distinguish the quality of FDI,which the results will be different too.So based on the heterogeneity of FDI,this paper chooses the individual foreign investment scale and foreign capital performance index to measure the quality of FDI.Also combining with the analysis on the reality of FDI quality and economic growth,and after studying the mechanism which is the impact of FDI quality on economic growth,The paper uses the data of 19 industries from 2004 to 2013 to analyze the effect of FDI quality on China's economic growth and the upgrading of industrial structure,discussing whether the quality of FDI can promote the upgrading of economy.Finally,Based on theoretical and empirical results,we put forward some policy recommendations.The results show that:the increase of FDI quantity is not significant for the upgrading of China's industrial structure,also most of FDI flow into the labor-intensive industry which is manufacturing industry,because of the use of low efficiency,which leading to environmental pollution,energy consumption,etc,so the simple expansion of the number of FDI will be detrimental to China's economic quality growth;The FDI quality rather than quantity can be better to promote the added value of the industry,With increasing the FDI profitability and the degree of localization,the scale of single FDI and the performance index have positive impacts on China's economic growth;Further classifying 19 industries as agriculture,industry and service industry,found that the number of FDI is not significant for the upgrading of industrial structure,so it's still not conducive to the growth of industrial output.As well as in the FDI quality indicators,only Performance index will help increase agricultural output,only Scale has a positive impact on the industrial development,but FDI quality index will have more fully beneficial effect on the service industry output growth,while the coefficient of the scale which has an influence on the growth of service industry is 0.00003 and the coefficient of performance is 0.81.So to promote our economy more efficiency and upgrade,we must introduce high quality FDI,FDI as soon as possible is achieved transition from "quantity" to "quality".