The Empirical Analysis Of The Economic Effect Of FDI In Shandong

As the main pattern of international capital inflows, FDI is now playing a more and more important role in the world economy for host countries, especially for developing countries. However, how can we evaluate the effects of the foreign direct investment for the economic growth? Different person has different opinions. Some scholars believe that FDI is significantly positive for a country's economic growth; others think that its compact is not so great yet. Therefore, it is necessary to analyze the latest time sequential data by using a series of econometrics models. On the basis of the important role that Shandong's economy plays, considering the rapid development of international direct investment around the world and the growth of attracting foreign direct investment in Shandong province in recent years, this paper, by analyzing the latest statistical data, impersonally validates that FDI in Shandong has played good role in economic growth. The main purpose of the paper is to give some empirical supports and help to the adjustment of the policy of absorbing foreign capital in the future.Obtaining from the elementary theory of introduction of FDI and economic development, this article analyzes the present situation of FDI in Shandong and its structural feature from six aspects -Development phase of FDI, overall scale,distribution of industrial structure, distribution of sources, distribution of regions and investment ways- by the time series data in the statistics data of Shandong from 1985 to 2006, on the basis of the before domestic and foreign related research, and give a further analysis of the status of FDI in Shandong's economy by the relationship of FDI and fixed asset investment, GDP, gross value of industrial output and employment. Then it establishes the corresponding econometrics model and analyzes the effect of FDI to Shandong's economy from four aspects- GDP, international trading, technology advancement and employment- by econometrics analysis software Eviews5.0,co-integration analysis, vector error correction model and granger-causality test. The empirical results indicate that FDI in Shandong has played good role in economic growth, international trading, technology advancement and employment. At last, some useful suggestions have been put forward for Shandong Province to absorb and utilize FDI reasonably.