The Impact Study Of Financial Development Of FDI Spillover Effects

With the increasing intensity of absorbing FDI,the research on the relationship between FDIand the economic growth of the host country has become an import part of theoretical research. Inthe reform and opening, scholars used the FDI capital effects to explain the phenomenon that weused FDI to make up the funds and foreign exchange gap, promoting the economic growth.However, with the development of the economics, the funds and foreign exchange gap is no longerclear, so that the traditional "two-gap" theory has been difficult to explain the phenomenon ofincreasing FDI. Therefore, scholars have begun to explain the impact of FDI on economic growthform the perspective of the FDI spillover effects. Among them, the influence factors on FDIspillover effects has become a focus,which includes:human capital, infrastructure,economicdevelopment and openness and so on,but the financial development has generally ignored.Infact,the process, in which the domestic enterprises can effectively absorb FDI spillover effects,willinevitably linke with the domestic financial system.And developed financial system througheffective investment the higher the risk of conversion and revenue management capabilities reducefinancing costs.In the existing research results, because of research method and the differentangles,making the conclusions are not the same.Therefor,in the context,we research the relationshipof financial development and FDI spillover effects,which has more important theoretical andpractical significance.Based on the previous literature in order,we drawed Alfaro(2001)two-sector model and the twomodels in economics to discuss the impact of financial development on the FDI spillovereffects,form the perspective of entrepreneurship development.On this basis,we furtherly used thepanel data of 1998 to 2008 containing 29 provinces(excluding Tibet and Hainan)to analysis theimpact of financial development on FDI spillover effects,from the empirical analysis.Among them, the empirical analysis of the specific steps:First, according to Feder's two-sectormodel, we verified the existence of FDI spillover effects, and estimated quantitative FDI spillover effects in 29provinces each year from 1998-2008;Second, we chose the optional non-state sector credit to GDP as the level offinancial development in China;Third, on the basis of quantitative FDI spillover effects,we tested thecointegration relations among the FDI investment, financial development and FDI spillovereffects.Also we used the fully modified least squares(FMOLS)to estimate the panel datacointegration coefficients of the panel data model.The empirical results show that:First,our country actually existed positive FDI spillovereffects,and the utilization of production factorselements within the Domestic department is the utilization of 1.17124 times.Second,different provinces of financial development on FDI spillovereffects is different.Jiangsu Province at the present stage of financial development is hindered FDI spillovereffects, and other provinces to promote financial development are spillover effects of FDI, but the effect ofdifferent sizes.Finally,based on the empirical conclusions,we put the corresponding policy recommendations.