2006Journal of International TradeRequires access

Foreign Direct Investment and Regional Economic Development in China:An Empirical Analysis

XU Xiao-hon

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Abstract

Since the 1990's, foreign direct investment(FDI)has been playing a more and more important role in the economic development of China. Using time series and panel data in the period of 1991-2003, this paper estimates the short and long term effect of FDI on the regional economy. It shows that FDI growth has a significant impact on the regional economic growth in China. FDI promoted regional economic growths. However, the unbalanced FDI among the regions worsens the unbalanced economic development among those regions. Finally this paper suggests new strategies and policies making to increase the amount of FDI in central and western regions, to reduce this regional disparity, and to promote the balanced economic growth in different regions in China.

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What this paper is about

Since the 1990's, foreign direct investment(FDI)has been playing a more and more important role in the economic development of China. Using time series and panel data in the period of 1991-2003, this paper estimates the short and long term effect of FDI on the regional economy. It shows that FDI growth has a significant impact on the regional economic growth in China. FDI promoted regional economic growths. However, the unbalanced FDI among the regions worsens the unbalanced economic development among those regions. Finally this paper suggests new strategies and policies making to increase the amount of FDI in central and western regions, to reduce this regional disparity, and to promote the balanced economic growth in different regions in China.

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Available abstract

Since the 1990's, foreign direct investment(FDI)has been playing a more and more important role in the economic development of China. Using time series and panel data in the period of 1991-2003, this paper estimates the short and long term effect of FDI on the regional economy. It shows that FDI growth has a significant impact on the regional economic growth in China. FDI promoted regional economic growths. However, the unbalanced FDI among the regions worsens the unbalanced economic development among those regions. Finally this paper suggests new strategies and policies making to increase the amount of FDI in central and western regions, to reduce this regional disparity, and to promote the balanced economic growth in different regions in China.

Key concepts: Foreign direct investment, China, Panel data, Economics, International economics, Investment (military), Economic geography, International trade

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