Research on China’s Regional Differences of Crowding-In or Crowding-Out Effect of FDI on Domestic Investment

Yang Xu, Xiaoling Yuan

Economic & Finance School, Xi’an Jiaotong University, Xi’an, China.

DOI: 10.4236/me.2012.37111                

Abstract

Since the reform and opening up, FDI has made a significant contribution to China’s economic development; however, the crowding-out phenomenon appears inevitably in some districts and industries where FDI enters intensively. Confronted with the new environment of foreign capital use after the international financial crisis, our country has begun to adjust investment attraction work from the policy level and needs to specify the work the next step according to every region’s situation. Based on this background, this paper examined how foreign investment impact domestic investment over the 30 years, especially contrasted regional differences of crowding-in or crowding-out effect of FDI on domestic investment in eastern, central and western China, then made further analysis of the causes, in order to supply the policy makers and investors with effective references.

Keywords

Foreign Investment; Domestic Investment; Crowding-In and Crowding-Out; Regional Differences

Conflicts of Interest

The authors declare no conflicts of interest.

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