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Foreign Direct Investment and Economic Growth: Theory and Application to China

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Author Info
Berthelemy, Jean-Claude
Demurger, Sylvie

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Abstract

The paper investigates the relationship between foreign direct investment and economic growth. A model of endogenous growth first highlights the transfer of foreign technology as a key determinant of economic growth, and suggests that economic growth may conversely influence the inflows of foreign capital. Simultaneous-equation model estimation based on a sample of 24 Chinese provinces, from 1985 to 1996, confirms the fundamental role played by foreign investment in provincial economic growth in China, and stresses the importance of potential growth in foreign investment decisions. Copyright 2000 by Blackwell Publishing Ltd

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Article provided by Blackwell Publishing in its journal Review of Development Economics.

Volume (Year): 4 (2000)
Issue (Month): 2 (June)
Pages: 140-55
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Handle: RePEc:bla:rdevec:v:4:y:2000:i:2:p:140-55

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  1. Yih-Chyi Chuang & Pi-Fum Hsu, 2004. "FDI, trade, and spillover efficiency: evidence from China's manufacturing sector," Applied Economics, Taylor and Francis Journals, vol. 36(10), pages 1103-1115, June. [Downloadable!] (restricted)
  2. James Laurenceson & Kam Ki Tang, . "The FDI-Income Growth Nexus: a review of the Chinese experience," EAERG Discussion Paper Series 0905, School of Economics, University of Queensland, Australia. [Downloadable!]
  3. Wang, Z. & O'Brien, R., 2003. "The Coastal-Inland Income Gap in China from 1991 to 1999: The Role of Geography and Policy," Discussion Paper Series In Economics And Econometrics 0301, Economics Division, School of Social Sciences, University of Southampton. [Downloadable!]
  4. Derek C. Jones & Cheng Li & Ann L. Owen*, 2003. "Growth and Regional Inequality in China During the Reform Era," William Davidson Institute Working Papers Series 2003-561, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  5. Gregory Brock, 2005. "Regional Growth in Russia During the 1990s--What Role Did FDI Play?," Post-Communist Economies, Taylor and Francis Journals, vol. 17(3), pages 319-329, September. [Downloadable!] (restricted)
  6. John Whalley & Xian Xin, 2006. "China's FDI and Non-FDI Economies and the Sustainability of Future High Chinese Growth," NBER Working Papers 12249, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Agenor, Pierre-Richard, 2001. "Benefits and costs of international financial integration : theory and facts," Policy Research Working Paper Series 2699, The World Bank. [Downloadable!]
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