The Relationship Between The Foreign Direct Investment And The Economic Growth Of China

The economic growth of our country presents remarkable characteristic of "the capital actuation", under the open current economic condition, the total investment of our country is composed of the domestic investment and the foreign direct investment (FDI); FDI is becoming the important origin of our country investment as well as the domestic capital. Under the condition of high speed development of our country economy, it is necessary to know the relationship between FDI and our country economy growth, as well as FDI and the domestic investment reciprocity: There exist "squeezes out effect" or "pushes in the effect" between FDI and domestic capitals. In this research, through analyzing the kneading panel data of the national 28 provinces and cities, autonomous region and municipality from 1985 to 2003 and series data of quarter time from 1995 to 2006, based on the VAR model, use the Johansen Cointegration test, Granger Causality test and Impulse Response Function to investigate the relationship between the foreign direct investment,the domestic investment and the Chinese economy growth and draw the following conclusion: (1) FDI has the remarkable acceleration to the economic growth of China, also the association of the human capital and the FDI could be able more effectively to promote the Chinese economy growth than the FDI alone; (2) The overflow effect of the FDI which grows to China economy truly has an economical development "the threshold", our country eastern part and the middle area have bridged over the economy level of development lowly "the threshold", in western area, the FDI to the local economy overflow effect presents negative, which indicated the western area have not bridged over the economical development critically "the threshold". (3) The foreign direct investment, the domestic investment and the economic growth of China have the long-term balanced relations, the foreign direct investment and the fixed asset investment has the positive promotion to the economic growth, the fixed asset investment have the fluctuated influence on our country's economy; (4) The foreign direct investment, the domestic investment and the economic growth of our country have he unidirectional causal relation in the means of the Granger Causality test. (5) The foreign direct investment invests still exist to "squeeze out effect" to our domestic investment, which revealed the quality and benefit of utilizing the foreign capital should be enhanced further.