An Research On Foreign Direct Investment In Service And Beijing's Economic Growth

In March 2007, China promulgated"views of State Council on speeding up the development of the service industry", which put forward that we should steadfastly push forward the opening-up in service industry, and strive to improve the quality of FDI in services. As China's capital city, Beijing's services industry has been the major industry in absorbing and making use of foreign direct investment for a long time, and its scale is one of the largest among the nation's provinces. Therefore, it will be beneficial for Beijing and other provinces in utilizing foreign capital in service industry to sum up the experience of foreign direct investment in services of Beijing.Using the utilization of foreign direct investment in Beijing's service sector as the studying object, this thesis mainly works over the influence of FDI to economic growth. First of all, by using Beijing's related data of foreign investment in services from 1988 to 2008, this paper describes the development situation of foreign direct investment in Beijing's service sector from the aspects of scale, industry structure, sources and investment style, and analyzes the environmental features of absorption and utilization of foreign direct investment in Beijing's service sector. Second, by combining the specific circumstances of Beijing, this thesis discusses the positive and possibly negative influences that foreign direct investment in services will exert on the economic growth and the relevant factors which will affect the relationship between FDI and economic growth in Beijing. Third, on the basis of the existed research result, this thesis tests the result that FDI in service exert on China's economic growth by using co-integration tests and Granger causality test, and it empirically tests its working paths. The results shows that there is a stable co-integration relationship between the foreign direct investment in services and economic growth in Beijing, the foreign direct investment in services is the Granger reason for Beijing's economic growth, and according to the size of the order, the paths of how it promote the economic growth are as follows: the industrial structure effect, technical effect, the capital effect and employment effect, but the institution effect is not significant. Finally, based on the results of theoretical and empirical analysis, this thesis brings forward policy recommendations for the utilization of foreign capital in Beijing's service sector in the future.