Research On The Relationship Of FDI?international Trade And Economic Growth In Hefei City

With the development of economic integration and international specialization,the importance of economic and trade cooperation has been highlighted,which has facilitated the development of other countries and regions.Since investment,consumption and export are the three main factors for facilitating economic growth,there is no doubt that investment and foreign trade play important roles in economic growth.The fact that international trade and foreign direct investment have appositive impact on economic growth has been proved by the rapid development of China's economy since the reform and opening-up.However,with the development of technology and trade economy,more researches should be made on the applicability of this principle to other regions.As the capital of Anhui province,Hefei has become the core city of Changjiang River Demonstration Zone,Hefei Metropolitan Circle and the Self-dependent Innovation Demonstration Area of Hefei,Wuhu and Bengbu.Furthermore,Hefei also takes the opportunity of the Belt and the Road Strategy and holds a broader view on foreign investment.Hefei has become the top city within Anhui province with its excellent performance due to more economic and trade exchange.Thus this paper makes Hefei as the research objective to discuss the relationship between the foreign direct investment,foreign trade and economic growth in Hefei.This paper consists of five parts.The first part is about the literature at home and abroad on the relationship between foreign direct investment,foreign trade and economic growth,and the research background and purpose,research methodology,the innovation and shortcoming of this research are also introduced in this part.The second part introduces the related terms and theory on foreign direct investment,external trade and economic growth.The third part gives a detailed analysis on the current situation of foreign investment,external trade and economic growth in Hefei.As for the foreign direct investment,a comparison between hefei and other cities in Anhui province has been made in terms of the scale,mode and distribution of foreign investment.And the analysis on the scale,type and distribution regions of trading has been analyzed from the aspect of foreign trade.Meanwhile,the analysis on the current situation of economic growth in hefei has been made from two aspects,including the total value of economic growth and distribution regions.Finally,we can draw a conclusion that the value of foreign trade and the total value of economic growth of Hefei are increased in a steady rate with the help of foreign investment.While some problems are still existed,such as the imbalanced distribution regions and centralized trading area.As the core part of this research,the fourth part first introduces the mechanism of the impact of foreign direct investment and foreign trade on economic growth.Then some investigations and data processing have been made to eliminate the heteroscedasticity by logarithmic transformation,including the total volume of FDI,the total value of import and export,the rate of economic growth in Hefei from 1997 to 2016.Then a VAR model is set up to analyze the relationship between FDI,foreign trade and economic growth,such as Cointegration Test,Granger Test,Error Correction Model,Impulse Response Function and Variance Decomposition.And the conclusion can be made that the long-term foreign direct investment,import and export could facilitate economic growth and the impact of export plays more important part in economic growth than foreign direct investment and import by Cointegration Test.And the findings of Vector Error Correction Model show that the rate of economic growth can be adjusted when foreign direct investment,import and export couldn't meet the requirement of economic growth.Finally,the findings of Impulse Response Function and Variance Decomposition show that export plays the most vita role in economic growth in short Term.The fifth part gives some suggestion based on the deepening of opening up to the outside world in conjunction with national strategies,we must strengthen capital and trade cooperation,open up new markets for trade,diversify the trade market,expand the scale of foreign direct investment,pay attention to the quality of foreign investment,optimize the distribution of foreign direct investment,and promote the upgrading of the industry.Balance the development of import and export trade and attach importance to processing trade.