The Performance Of Quantitative Study On Beijing And Shanghai’s Outward Foreign Direet Investment

Relevant date show that in2011per capita GDP of Beijing and Shanghai rankedthe top in China, the economic development of both played a leading role on theChinese economy. Both of them ranked in the forefront as well in terms of the stockand flow in view of the scale of Outward Foreign Direct Investment (OFDI) of2011.OFDI will indirectly affect the economic growth through the impact of import andexport trades, employment quality and technology advances, although OFDI does notmake direct contributions to the GDP and its direct effects on the economic growthare not significant.First of all, on the basis of foreign and domestic OFDI papers, we make acomparative analysis on the current status of OFDI in both cities, which mainly talksabout inventors, investment areas, industries and investment strategies. Then weanalyze the development level of OFDI in two cities based on its development stageand the percentage over GDP and OND. After that by using the quantitative analysisto discuss how OFDI affects trade, employment and technology, we can thereforecompute its indirect stimulation effect on the economic development. Finally, someconstructive ideas have been discussed according to the above analysis.Overall, we find that OFDI of these two areas have positive effects on theeconomic growth. Firstly, in terms of effects of OFDI on the trade, export promotioneffects are greater than export substitution effects while import reverse effects arebigger than import transfer effects and therefore explaining that OFDI is beneficial tothe development of imports and exports trade of the two cities. Secondly, regardingthe effect of OFDI on the total employment, Beijing’s employment promotion effectsare greater than the employment substitution effects while Shanghai’s employment promotion effects is less than the employment substitution effects, which indicatethat OFDI of Beijing can promote the employment and increase the economic growthindirectly while Shanghai is on the contrary. Then, from the effect of OFDI on theemployment quality, Beijing’s OFDI pulls the third industry employment which canoffset the negative effects of the first and the second industry employment, whileShanghai’s OFDI may reduce the employment of the first and the second industrywhich are higher than the positive effect of pulling the third industry. Thirdly, fromthe effect of OFDI to the technology, OFDI of both cities may promote the technologyadvances, which can pull the economic growth indirectly.Hence, we can draw the following conclusion that the OFDI of Beijing is able toindirectly pull the economic growth through promoting the trade, employment andtechnology while the OFDI of Shanghai has negative correlation with theemployment but it can promote the trade and the technology and thus indirectlypulling the economic growth in the overall perspective. Based on above conclusions,we come up with some policy suggestions such as carrying out special legislation ofOFDI and unifying the regulatory authority, making full use of comparativeadvantages, developing the third industry efficiently and encouraging privateenterprises to establish their business abroad etc.