2005•Yunchou yu guanliRequires access

Analysis of Co-integration on the Relation between FDI and China's Economic Growth

Lu Lei

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Abstract

This paper analyzes the effect of FDI on China's economic growth by utilizing the co-integration and error correction model with the economic data from 1984 to 2003.Empirical results show that there is a stable positive equilibrium relationship between FDI and China's economic growth in the long or short run.Through the Granger causality test,we find that FDI is the reason for China's economic growth,and conversely,the conclusion isn't true.

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What this paper is about

This paper analyzes the effect of FDI on China's economic growth by utilizing the co-integration and error correction model with the economic data from 1984 to 2003.Empirical results show that there is a stable positive equilibrium relationship between FDI and China's economic growth in the long or short run.Through the Granger causality test,we find that FDI is the reason for China's economic growth,and conversely,the conclusion isn't true.

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Available abstract

This paper analyzes the effect of FDI on China's economic growth by utilizing the co-integration and error correction model with the economic data from 1984 to 2003.Empirical results show that there is a stable positive equilibrium relationship between FDI and China's economic growth in the long or short run.Through the Granger causality test,we find that FDI is the reason for China's economic growth,and conversely,the conclusion isn't true.

Key concepts: Foreign direct investment, China, Granger causality, Error correction model, Economics, Causality (physics), Cointegration, Augmented Dickey–Fuller test

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