Research On The Impact Of Capital Flow On Economic Growth In Hubei Province: 1994-2009

Capital is one of two production elements. Efficiency of capital flows can decide the effective and rational disposition of regional internal resources, which is capable of promoting regional economic growth. With China's "1025" planning entering into the implementation stage and the strategy of rise of central China moving forwards steadily, regional economic policy has obviously shifted the focus on the Midwest. Hubei have innate geographical advantages and economic advantages, the economy of Hubei province is directly related to the smooth implementation of the central region strategy. So the study of influence of capital flows factors on economic growth of Hubei province can significantly advise a good grasp of the historical opportunity for the economic development.First, this paper expounds the significance of research, the relevant theory of literature are discussed. And being bases on some related literature research, five capital flows variables are figured out, namely, foreign direct investment, fixed assets investment, financial transfer payment, capital market direct financing and bank capital.Secondly, the paper analyses the present situation of the economic growth of Hubei province and five capital flow variables in the change trend and its development, each variable analysis method and measure standard differ from each other according to its characteristics. The author finds that during direct financing in the capital market, change trend each variable has growing, but the growth mode and speed are different.Thirdly, based on requirement, this paper chooses four variables and determines the time span. Before doing the least squares estimate, it carries out the stationarity test. In the end, it empirically analyses the relationship between five capital flow variables and economic growth of Hubei province, and through the relevant econometric methods tests the effectiveness and rationality of the model. Conclusions are drawn as follow:loans from financial institutions influence GDP mostly intensively and the other less intensive factors are respectively fixed asset investment, financial institutions deposits and financial transfer payment whereas foreign direct investment produced negative effects on GDP. Finally, through empirical analysis conclusion, this paper puts forward the relevant ideas on regional economic policy, that is, introduce high quality FDI, guide FDI correctly, reasonable use of fiscal expenditure adjustment fixed asset investment, completing the financial transfer payment system, harmonizing regional fiscal policy and national macroeconomic policy, making full use of capital market, constantly optimizing regional financial market environment, accelerating regional financial innovation and constantly improving bank letter endowment mechanism.