The Impact Of Foreign Direct Investment On China’s Domestic Industrial Productivity Of Capital

In the1970s, China officially Implemented opening economic policy. A largenumber of foreign investment poured into our country. From then on, China began toattracting foreign direct investment (FDI), formally. Since1990, the volume of FDIflowed into China began to soar. In2006, the number is36times of1985’s, increasingto$69.468billion;2011’s number reached$116.011billion, a new record. With theincreasing number of FDI, China’s economic development had greatly improved inquantity and quality, which also caused the domestic scholars to study on FDIfervently. Especially today’s international economies became more and more close,the Scholars in all sectors’ enthusiasm upsurged.This paper summarizes domestic and international researches on FDI briefly, onthe basis of previous studies, does analysis of FDI’s effect on host country economicgrowth on theoretical level, and further analysis of the factors influencing FDI’spositive externalities. About evidence, this paper use malmquist index method tomeasure the productivity of domestic-owned industry firstly, establish econometricmodels and analyze the factors which impact FDI’s externalities. Then, by the resultsof the regression, the paper find out that FDI’s impact on China’s economy changesdue to different channels, and shows regional characteristics. Finally, based on theresults, propose the corresponding countermeasures which try to improve thecompetitiveness of domestic industry and make central and western regions’ economydevelop healthly.