The Research On The Relationship Among Foreign Aid, Trade And Investment

Under the current international environment, the majority of countries have connectedwith foreign aid. Foreign aid is important to the development of national economic and it hasthe important position in national economic policy. The status of foreign aid is more and moreoutstanding,so many countries pay more attention to it. Foreign aid has become a importantchannel to the friendly economic ties between countries and strategic alliance, and to realizeeffective communication between the developed countries and developing countries. In form,foreign aid is a kind of economic policy, but in the normal conditions, it involves politics,economy, culture, diplomacy, military, science and technology and other aspects in thenational relations. Therefore, foreign aid theory has gradually become an important researchfield of international political economy.As important factor of national economic, trade and investment is power to promote thedevelopment of national economy, especially, its role in the economic development and socialprogress is becoming more and more obvious. With the development trend of globaleconomic integration, integration of trade and investment has gradually become an importanttrend in the development of the world today. In international economic affairs, especially inareas such as trade, investment, and foreign aid, countries around the world are exploring anew economic structure relations.In the past few years, trade and investment between tradingpartners has increased sharply in developing countries and regions. the rapid development ofthe world and the increase of international aid are one of the main factors driving this change.With the development of the change of the world and international relations, theimportance of foreign aid is more pronounced. Foreign aid has become the important way toincrease exports and foreign investment for many countries, especially to the developingcountries, it also a key way to contact national economic. Foreign aid and trade andinvestment constitute the three pillars of international economic relations together. Foreignaid has gradually become an important link to promote bilateral economic and tradecooperation and investment. So, researching the relations among them is particularlyimportant.In this paper, on the basis of existing research literature, through the analysis of thecurrent developing situation of foreign aid, we use this way, combine theory with empirical, toanalysis the problem. In theory, we expound some problems about the relationship of foreign aid, trade and investment. In the empirical, we use the model to analysis the relationshipbetween foreign aid and trade, foreign aid and investment from the perspective of therecipient countries. We hope conclude closely connection among foreign aid, trade andinvestment. And according to the estimation results, we will give some suggestion to Chineseforeign aid, in order to promote the economic development of the recipient countries andharmony progress of the international relationship in an even better fashion.