Foreign Direct Investment In Henan Province, The Economic Driving Effect

With the deepening of international labor division and the fast development of economic globalization, opening up to the outside world is more and more important for a country's economy and FDI is playing a more and more important role in its extrovert economy. Under such a international background, low level of opening up and slowly developing of its extrovert economy is a great obstacle for the economic development of Henan province, a inland province. The government of Henan province has regarded the opening-up-facilitating policy as the most important strategy. As a very important part of the strategy, the FI or FDI-facilitating policy is becoming more and more important. In such conditions, making studies on the economy-facilitated effects of FDI in Henan Province is of great significance.In recent years, FDI develops quickly and contributes a lot to the development of Henan economy. First, FDI fluctuates in great accordance with and exert a positive effect on economic growth in Henan province. Second, FDI can supplement with domestic saving deposits and promote the capital formation. What's more, it enhances the quality and efficiency of capital formation. Third, it can provide a large number of high-quanlity employment opportunities although its effect is very small. At the same time, the entry of FDI improves the quantity of labor force and enhances the productivity. Fourth, FDI promote the quantity and optimizing the structure of foreign trade in Henan. But compared with the average level of our country, the four effects of FDI mentioned above are very small in Henan province.As we all know, the economy-facilitated effects of FDI are affected by many factors not only of the FDI but also of the economic development of the host country. The reason why the economy-facilitated effects of FDI in Henan are very small is that they are also affected by the factors of two parts mentioned above. One hand, the small scale, unreasonable structure, low technology content and serious technology control of FDI and low level of relationship with domestic enterprises all restrict the economy-facilitated effects. On the other hand, low attraction to FDI and inferior absorption of FDI are important reasons of the low economy-facilitated effects of FDI in Henan.Therefore, optimizing investment environment and improving its attraction to and enlarge the scale of FDI, strengthening the leading and supervising of FDI inflow and optimizing the structure of FDI in Henan, enhancing the absorption and promoting the spillover effect is necessary for enhancing the economy-facilitated effects of FDI, upgrading its opening-up and implementing the FDI-facilitating strategy to promote the economic development in Henan.