The Impact of Foreign Direct Investment and Industrialization on Economic Growth in China

Wenbiao LI
December 2012
Advances in Information Sciences & Service Sciences;Dec2012, Vol. 4 Issue 22, p422
Academic Journal
According to the data of the time series from 1980 to 2011 in China, through establish multiple regression econometric model, this study carried out the causality test based on un it root and co-integration analysis to conduct the empirical analysis on the relationship between China's foreign direct investment (FDI), industrialization and economic growth. The results show that: First, the foreign direct investment has a significant effect on economic growth; second, industrialization is negatively related to economic growth; third, in the long run, the proportion of the secondary industry output value accounting for real gross domestic product (GDP) makes a negative contribution to economic growth. Governments should devote their efforts to developing the tertiary industry, meantime, to attract more FDI to China, should encourage more domestic investment, ensure political stability and make guided openness of the economy the watchword in this era of global liberalization to trade and FDI policies in order to make FDI growth enhancing and economic growth in China.


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