Study On The Influences Of Different FDI Regions On Economic Growth Based On The Cultural Differences

The relationship between FDI and economic growth has been an enduring hot topic of economics in recent years. So far, the domestic and foreign scholars have carried out a series of sutdies on theoretical research and empirical research, and gained abundant achievements. In the theoretical research, most scholars believe that the FDI can influence the economy of the host country through "capital effect" and "spillover effect". But in the empirical study, the conclusion of FDI can promote the economy of the host country was not the same. Notably, few scholars pay attention to heterogeneity of FDI impact on economic growth in both theoretical and empirical studies. The existing researches have not systematically explained the effects of different characteristics of FDI on economic growth. Most of researches are based on the assumption of FDI homogeneity, the study of the heterogeneity of FDI are still belongs to blank. This paper intends to contribute to this absent literature in two ways. First, based on the heterogeneity of FDI, this paper tries to divide FDI into different sources, and study on the contribution mechanism of FDI to economic growth from the perspective of cultural differences. Second, this paper discusses the different contribution to China’s economic growth of FDI from different sources through empirical test. The innovation of this research lies in the influence of different FDI regions on economic growth from the perspective of cultural differences, which fills in the blank of existing literature.Theoretical analysis and experience analysis are both used in this paper. In the theoretical analysis, the author starts from literature review in three aspects, including the theory of international direct investment, the mechanism of FDI affecting economic growth and the cultural differences. Then this paper tries to find out the mechanism between them. It found that if we can make a good cultural integration between the FDI source and host countries, then FDI will greatly promote the economic growth of the host country. Conversely, if the cultural conflict between the can not be reconciled, then FDI will prevent the economy of the host country.In the empirical analysis, by using the provincial panel data between years 2003-2012, the author tries to explore the impact of different FDI regions on economic growth from the perspective of the nation and region. The conclusion has confirmed the guesses based on mechanism analysis. Combined with those aspects of study, the paper argues that: first, the spillover effect of FDI is not an automatic process, the role of foreign capital from different sources in promoting economic growth is affected by a variety of complex factors, and not homogeneous. The empirical results indicate that FDI from Hongkong significantly contributed to China’s economic growth. Its spillover effect is strongest. FDI from Japan takes second place and FDI from USA is not clear. Generally speaking, the foreign investors, whose culture, technical level and market environment were closer to China, then the integration of FDI and China’s economy will be more easily, the spillover effect of FDI will be more obvious. Second, the spillover effect of FDI exists threshold effect. Only when the regional economic development reaches to a certain extent, will spillover effect of FDI obviously occur. In the developed regions, FDI from Hongkong, Japan and USA can all promote local economic growth, and the contribution of FDI from Hongkong is the biggest. Otherwise, in the developing regions, although FDI from Hongkong still significantly produces spillover effect, but the spillover effect of the other two kinds of foreign capital are not obvious. In addition, FDI from USA plays a positive role in economic growth of less-developed regions. The relatively liberal market environment of less-developed regions can help America make full use of the local resource. The less-developed regions might benefit from "latecomer advantage" in the field of technology.