| Increase either in fiscal expenditure or foreign derect investment brings economic growth,with the two complementary to each other.Raise in fiscal expenditure directly boost FDI while FDI promotes both economic growth and fiscal expenditure.When the monetary policy maker interupt in the process where foreign capital is obtained,it can be concluded that fiscal expenditure and FDI collectively accelerate economic growth and are muturally benefical to each other with a certain cycle.This is concluded with the help of IS-LM-BP curve.FDI boosts economic growth through 4 differert spillout effects,while by investing in education, science and technology,research and development as well as infrustructure,increase in fiscal expenditure creats a multiplied-effect working on the economy.Furthermore,these efforts improves relevant industries which brings much more FDI,with HR resources in paticular. Based on mathmatical deduction,the output coefficiency of fiscal spending have an impact on the balanced economic growth path together with the spillout effects of technology brought by foreign capital.However,FDI in eastern China still focus on labor-intensive industries with a low portion in supplying service for foreign businesses.These two together badly undermine its contribution to economic growth.With empirical anylysis on data from 1998 to 2006,it can be found that increase in fiscal spending does contribute to FDI,which produce not only extrusion effect to private investment,and it is not significant impaction on Technology spillover of foreign investment.These indicate sound economic base and geographical advantage of eastern area,where quality is increasingly emphasized than quantity in absorbing foreign funds. Thus it’s suggested that focus should be paid on the adjustment of stucture in FDI into China in future,companied with its quality.By improving fiscal expenditure structure and balancing regional economic growth will China embrace a better and faster economic growth. |
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