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Foreign Direct Investment and Regional Growth in China

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  • Huang, Shuo

Abstract

China has experienced rapid economic growth and the recent Global Economic Projections 2004 by the World Bank suggest that there is a continuation of Chinese growth of at lest 7 to 8 percent (World Bank, 2003). Nevertheless, on the background of rapid growth came increasing regional disparities. This paper uses the augmented Solow-Swan model of Mankiw, Romer and Weil (1992) to analyze data on provinces of China over the reform period 1978-2003. Our main finding is that FDI has a positive and statistically significant impact on economic growth as theory predicts and the augmented Solow-Swan model provides an excellent fit of the data. The other determinants are significant at one percent level and have the expected sign. However, the human capital is insignificant or the coefficient is negative.

Suggested Citation

  • Huang, Shuo, 2009. "Foreign Direct Investment and Regional Growth in China," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 14, Verein für Socialpolitik, Research Committee Development Economics.
  • Handle: RePEc:zbw:gdec09:14
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    Keywords

    economic growth; conditional convergence; regional disparities;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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