FDI and economic growth in China.

摘要

During recent decades, the rapid economic development of China has drawn attention worldwide. Following the trend of globalization in current world economy, particularly after the revolution of information technology, China has quickly advanced and successfully integrated into the global economy through liberalization and opening-up to the world. It is widely believed that China is now a major and dominant power in the global economy. Despite the huge success in economic development, the existing regional inequality remains a challenge for both central and local government. Among economic researchers, there have been debates and controversies on the impact of FDI on transitional economies. Some researchers argue that FDI-dependent economic reform strategy will not lead to sustainable economic development. This research was first encouraged by their debates on FDI and economic growth. There exists a large body of research regarding FDI and economic growth. Most of the research utilized country-level data to conduct cross-country studies. The impact of FDI on economic growth at the provincial level is rarely studied. In this research, I investigate the relationship between FDI and economic growth by examining the impact of FDI on economic growth in China at the provincial level. This research intends to encourage more similar research and improve the data quality of the research on economic development in China, particularly at the provincial level. Meanwhile, I control for heterogeneity, that is, the province-specific effects, and rule out potential bias to obtain more consistent and efficient estimation by constructing different models with different approaches: not only OLS model, but also fixed effects model, and dynamic panel model. Furthermore, I also examine the effect of other determinants of economic growth. The results show that, at the provincial level, FDI does not exert a significant and positive relationship on economic growth in China after we control for the province-specific effects to improve our estimation.