This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Foreign Direct Investment, Domestic Investment, and Economic Growth in China: A Time Series Analysis

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Tang, Sumei
Selvanathan, E.A.
Selvanathan, S.

Additional information is available for the following registered author(s):

Abstract

In this paper, we investigate the causal link between foreign direct investment (FDI), domestic investment and economic growth in China for the period 1988-2003. Towards this purpose, a multivariate VAR system with error correction model (ECM) and the innovation accounting (variance decomposition and impulse response function analysis) techniques are used. The results show that while there is a bi-directional causality between domestic investment and economic growth, there is only a single-directional causality from FDI to domestic investment and to economic growth. Rather than crowding out domestic investment, FDI is found to be complementary with domestic investment. Thus, FDI has not only assisted in overcoming shortage of capital, it has also stimulated economic growth through complementing domestic investment in China.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.wider.unu.edu/stc/repec/pdfs/rp2008/rp2008-19.pdf
File Format:
File Function:
Download Restriction: no

Publisher Info
Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Papers with number RP2008/19.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 18 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:unu:wpaper:rp2008-19

Contact details of provider:
Postal: Katajanokanlaituri 6B, 00160 Helsinki
Phone: +358-9-6159911
Fax: +358-9-61599333
Email:
Web page: http://www.wider.unu.edu/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Bruck Tadesse).

Related research
Keywords: foreign direct investment; domestic investment; economic growth; multivariate VAR system; error correction model;

Other versions of this item:

This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lutz Kilian, 1998. "Small-Sample Confidence Intervals For Impulse Response Functions," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 218-230, May. [Downloadable!] (restricted)
  2. Noorzoy, M. S., 1979. "Flows of direct investment and their effects on investment in Canada," Economics Letters, Elsevier, vol. 2(3), pages 257-261. [Downloadable!] (restricted)
  3. Liu, Xiaming & Song, Haiyan & Romilly, Peter, 1997. "An Empirical Investigation of the Causal Relationship between Openness and Economic Growth in China," Applied Economics, Taylor and Francis Journals, vol. 29(12), pages 1679-86, December. [Downloadable!] (restricted)
    Other versions:
  4. Liu, Xiaohui & Burridge, Peter & Sinclair, P J N, 2002. "Relationships between Economic Growth, Foreign Direct Investment and Trade: Evidence from China," Applied Economics, Taylor and Francis Journals, vol. 34(11), pages 1433-40, July. [Downloadable!] (restricted)
  5. Gerald Epstein & Elissa Braunstein, 2002. "Bargaining Power and Foreign Direct Investment in China: Can 1.3 Billion Consumers Tame the Multinationals?," Working Papers wp45, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
    Other versions:
  6. Huang, Yasheng, 2003. "One country, two systems: Foreign-invested enterprises and domestic firms in China," China Economic Review, Elsevier, vol. 14(4), pages 404-416. [Downloadable!] (restricted)
  7. David Deok-Ki Kim & Jung-Soo Seo, 2003. "Does FDI inflow crowd out domestic investment in Korea?," Journal of Economic Studies, Emerald Group Publishing, vol. 30(6), pages 605-622, October. [Downloadable!] (restricted)
  8. Haishun Sun, 1998. "Macroeconomic Impact of Direct Foreign Investment in China: 1979-96," The World Economy, Blackwell Publishing, vol. 21(5), pages 675-694, 07. [Downloadable!] (restricted)
  9. Anthony B. Atkinson & Andrea Brandolini, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 771-799, September. [Downloadable!] (restricted)
  10. Van Loo, Frances, 1977. "The Effect of Foreign Direct Investment on Investment in Canada," The Review of Economics and Statistics, MIT Press, vol. 59(4), pages 474-81, November. [Downloadable!] (restricted)
  11. Jin, Jang C & Yu, Eden S H, 1996. "Export-Led Growth and the US Economy: Another Look," Applied Economics Letters, Taylor and Francis Journals, vol. 3(5), pages 341-44, May. [Downloadable!] (restricted)
  12. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June. [Downloadable!] (restricted)
    Other versions:
  13. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? Over five million full texts a year are downloaded through IDEAS.

This page was last updated on 2009-12-3.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.