FDI Effects Of Liaoning Based On G-S-T-T-S Framework

Practice of countries’development, including China’s recent economic situation, shows that economic development needs not only the continuous expansion of economic aggregate but also the continuous upgrade of economic structure, together with the support of technological innovation and certain employment rate. GDP of Liaoning Province, one of China’s important heavy industrial regions, surpasses2.2trillion yuan in2011, but it obviously runs out of stream and needs further restructuring its industries and upgrading its technologies. How to promote a stable and comprehensive development of Liaoning’s economy remains a major task currently.FDI, one special asset and an important carrier of international industrial transfer, greatly affects regional economic development. In terms of economic growth, foreign capital can be transformed into investment, which directly promotes the expansion of economic aggregate. Simultaneously, high-quality foreign capital could also bring the enhancement of resource allocation efficiency and the change of mode of economic growth. In terms of industrial structural upgrade, foreign capital gradually turns to manufacturing and service industries, and these investment preferences directly cause the change of industrial structures. Meanwhile, the inner structural change of foreign investment could also effectively promote the efficiency of different industries. In terms of technological innovation, foreign capital, through upstream and downstream industrial connection, competition, demonstration and imitation effects, will gradually upgrade local entrepreneurial technological level. In terms of foreign trade, foreign capital and foreign trade either promote or substitute one another. They are closely related. In terms of social welfare, foreign capital could directly produce more jobs and more tax revenue, therefore, indirectly promote the stable and harmonious development of society.Liaoning has used foreign capital for over thirty years and followed an open-up pattern of from coastal areas to inland, investment attraction from small amount to large, investment fields from narrow range to wide. Foreign capital has already penetrated to all sectors of the economy, which steady goes from closed to open. In2011, Liaoning’s actual usage of foreign capital was up to24.267billion US dollars, ranked the second in the country. Although we proposed that we should have attached importance to the quality of foreign capital when we were enlarging the quantity, we still put business and investment attraction as our current major task, while ignored the research on effects of foreign investment to economic development. With the new situation of domestic and overseas economies and Liaoning’s new development requirements, we should make comprehensive consideration on the effects of foreign capital to Liaoning’s economic development, including economic growth effects, industrial upgrading effects, technological innovation effects, foreign trade effects and employment add-up effects. We should also give a rational view towards the role of foreign capital to Liaoning’s economic growth and industrial competitiveness enhancement.Main ideas of the paper include:Chapter Ⅰ introduces research background and significance; reviews documentation related to economic development, focusing on imperial researches so as to define the outlet, contents and innovative suggestions. Chapter ⅢⅡ sets up research framework of economic development effects and makes theoretical interpretations. Chapter Ⅲ reviews Liaoning’s history of foreign capital utilization and the role of foreign capital in Liaoning’s economy, and makes correlation analysis on effects of foreign capital to economic development in five perspectives. Chapter Ⅳ determines evaluation methods of foreign capital to economic development effects and ten evaluation include in five areas. Chapter Ⅴ makes imperial analysis on the changing trend of five economic development effects caused by foreign capital since2000. Chapter Ⅵ, from the perspective of regional development, makes imperial and comparative analysis on the five economic development effects of the fourteen cities of Liaoning caused by domestic and foreign capital. Chapter VII, on the basis of summarizing the conclusions of the previous two chapters, points out problems existed in the process of Liaoning’s foreign capital attraction and puts forward directions of Liaoning’s future foreign capital attraction and related proposals so that foreign capital could better and more effectively promote Liaoning’s economic development.Main viewpoints include:In General, foreign capital and Liaoning’s economic development are closely interrelated. Foreign capital, to some extent, promoted Liaoning’s economic growth and optimized secondary and tertiary industrial structures. With time passing by, the role of foreign capital to technological innovation has been weakening. In fact, foreign capital didn’t play a good role in Liaoning’s foreign trade expansion and open economy; while in terms of employment increase, it did play a good role in the short term. However, foreign capital in Liaoning did not have good effects in changing economic growth mode and development of industrial structure supererogation. Industrial clusters and chains centered on large enterprises did not come into being, which is hard to bring into play the deep effects of foreign capital to the upgrade of regional economic competitiveness and that of export ability. Comparatively, the more developed the cities are, the more obvious the role of foreign capital play in the industrial structural upgrade. For cities with economic development in the middle class, foreign capital has more effects on secondary industrial structural upgrade. Although there are differences in the inventory and quality of human resources in different cities, and even more in the short-term employment effects, there are no big gaps in terms of technological standards between foreign-capital-invested enterprise and localsIn conclusion, the paper proposes that, in the process of building a fully open economy, Liaoning needs to change its growth mode when using foreign capital. We need to combine foreign capital utilization with Liaoning’s industrial structural adjustment and optimization and upgrade; with the coordinated development of different areas; with the enhancement of the independent innovative capacity; with the increase of export and the development of export-oriented economy; with the strengthening of Liaoning’s economic strength and its international competitiveness. Policy suggestions on how Liaoning should use its foreign capital in the new circumstances include optimizing Liaoning’s foreign capital attraction climate; promoting industrial connections; enhancing the co-growth of foreign capital and foreign trade; determining major areas of attracting foreign capital suitable for each city, etc.