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FDI, domestic capital and economic growth: Evidence from panel data at China's provincial level

Author

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  • LUO Changyuan

    (Center for European Studies (CES), Fudan University, Shanghai 200433, China; China Center for Economic Studies (CCES), Fudan University, Shanghai 200433, China)

Abstract

Based on panel data at the provincial level in China, this paper found that direct effects foreign direct investment (FDI) had on economic growth were of insignificance. However, through improving technical efficiency and crowding in domestic investment, FDI produced positive effects on China's economy. The state sector still played a major part in the total fixed investment, therefore, direct effects on growth were significant. Although private sector was increasingly important for the whole economy, it had no direct influences on economic growth. Meanwhile, neither the state sector nor private sector made contribution to the improvement on technical efficiency.

Suggested Citation

  • LUO Changyuan, 2007. "FDI, domestic capital and economic growth: Evidence from panel data at China's provincial level," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(1), pages 92-113, March.
    • Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:92-113
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0005-1
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    Citations

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    Cited by:

    1. Nguyen Van Bon, 2019. "The Role Of Institutional Quality In The Relationship Between Fdi And Economic Growth In Vietnam: Empirical Evidence From Provincial Data," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 601-623, June.
    2. Vu, Tam Bang & Noy, Ilan, 2009. "Sectoral analysis of foreign direct investment and growth in the developed countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(2), pages 402-413, April.
    3. SAGLAM, B. Bayraktar & Yalta, A.Y, 2011. "Dynamic Linkages Among Foreign Direct Investment, Public Investment And Private Investment: Evidence From Turkey," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(2).
    4. Adom, Philip K. & Kwakwa, Paul Adjei, 2014. "Effects of changing trade structure and technical characteristics of the manufacturing sector on energy intensity in Ghana," Renewable and Sustainable Energy Reviews, Elsevier, vol. 35(C), pages 475-483.
    5. Bu, Maoliang & Li, Shuang & Jiang, Lei, 2019. "Foreign direct investment and energy intensity in China: Firm-level evidence," Energy Economics, Elsevier, vol. 80(C), pages 366-376.
    6. Thet Mon Soe, 2020. "Economic Effects of Inward Foreign Direct Investment in Myanmar," Bulletin of Applied Economics, Risk Market Journals, vol. 7(2), pages 175-190.

    More about this item

    Keywords

    FDI; economic growth; TFP; capital accumulation;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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