The Determinants Of Macroeconomic Investment In China And Regional Investment Differences

This thesis analyses the current situation of investment in China from the aspects of the trend, industrial and regional structure,and compares it to the international countries . The determinants of macroeconomic investment in China are various in the long term. The growth of investment in China is attributed to three main factors including return on capital, economic transition and financing restriction. The return on capital is chief factor, which at different levels will impulse different investment activities to all the investors. Our country is in the economic transition ,and the institution of economic and the change of structure impact on the growth of investmen significantly. Financing restriction also have an effect on the change of investment through the capital cost and capital sources. Then the three main factors can be divided into ten indices and be selected, and the empirical model on the determinants of investment in China is presented. Based on provincial panel data during the period of 1995 to 2007, empirical results show that the above factors boost the growth of investment in China effectively and the speed of investment growth can be attributed to the integrated effect from the determinants. Comparatively financing restriction, city course and tertiary industry development make the most significant contributions among these determinants. In addition, because of the orders of opening, the resource endowments , the regional differences and other reasons, there are significant differencs in the investment of China. This thesis further uses Theil index to analyse the investment differencs of the eastern, central and western areas in China, and get the result that the investment differencs of the three areas in China gradually reduce since 1995. Then based on provincial panel data of eastern 11 provinces, central 10 provinces and western 9 provinces respectively during the period of 1995 to 2007, the results of the three regional empirical model on the determinants of investment of eastern, central and western areas in China show that the growth of investment of the three areas in China influenced by the most of the determinants of return to capital, economic transition and financing restriction. These results show that the three areas have a basic homogeneity in the determinants of macroeconomic investment, while there are also a few factors with the difference result compared with the national model , which shows some of the specificity of the regional investment.