Empirical Analysis Of FDI On The Regional Income Disparity Of China

Since the reform and opening up, China in order to speed up the opening totake a number of incentives for the introduction of foreign investment, and hasmade tremendous achievements. From1979to2010, China’s total actual use offoreign direct investment amounting to$1,048,386,000,000, and the averageannual growth rate of26.7%. In2010, China’s actual use of foreign capital for thefirst time exceeded100billion U.S. dollars, up to$105.74billion. For18years, inthe first of the developing countries. Become one on the world to attract foreigninvestment than any other country. Then use the income Theil index to measureregional income inequality condition, Theil index decomposition of the overallincome of the country into regional and regional internal revenue Theil index.However, the rapid growth in foreign direct investment at the same time, due to theimbalance in the distribution of China’s investment in the region, the differences inthe performance index, the inevitable result of foreign direct investment in thedifferent regional economic impact, inevitably affect residents’ income gap inChina.In this paper, on the basis of the theory of the welfare effects of internationalcapital flows, Kuznets inverted U-curve "theory, an empirical analysis of the impact of China’s foreign direct investment on regional income gap. By our region from1986to2010, the standard deviation of per capita GDP and per capita FDI trendcharts and correlation analysis to infer FDI on regional income gap there is acorrelation. Then income Theil index to measure regional income gap, thedecomposability of the Theil index the National overall Theil index is broken downinto a regional and regional internal revenue Theil index. And calculate the eastern,central and western regions within the income Theil index and income Theil indexfor the country and within the three major regions as explanatory variables, selectforeign openness as the main explanatory variable combination of factors affect thedistribution of income as an explanatory variable to build econometric model tostudy the impact of foreign direct investment in the country and the eastern, centraland western regions of the income gap. The combination of theoretical andempirical analysis, our out foreign openness of the country and the eastern part ofthe income gap exists negative impact of this conclusion is consistent with theKuznets inverted U-curve "theory, while the underdeveloped central and westernregions, making foreign openness at this stage, the income gap between the westernregion there is a positive impact., And then from the point of view of foreign directinvestment in the extrusion of the conclusions of these studies put forward aproposal to reduce regional income gap.