FDI and Economic Development: Evidence from Mainland China
Liyan Liu
DOI: 10.4236/jssm.2011.44047   PDF         5,495 Downloads   11,767 Views   Citations


Endeavors have been made in this paper to discern the long-run relations between FDI (Foreign Direct Investment) and economic development in China in the comprehensive framework, which incorporates determinants as output, FDI, capital formation, employment, human capital and international openness. VAR (vector autoregressive models)Impulse Response, Variance Decomposition, Johansen Co-integration and VECM (vector error correction) have been estimated, focusing on the long-run structural relations; findings indicate that in the long run, FDI tends to decrease economic growth; economic development in China seems to be fueled by domestic capital accumulation and employment growth; FDI inflows do crowd out domestic capitals, and reduce employment growth.

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Liu, L. (2011) FDI and Economic Development: Evidence from Mainland China. Journal of Service Science and Management, 4, 419-427. doi: 10.4236/jssm.2011.44047.

Conflicts of Interest

The authors declare no conflicts of interest.


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