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has been cited by the following article:

• TITLE: FDI and Economic Development: Evidence from Mainland China

  AUTHORS: Liyan Liu

  KEYWORDS: FDI, Economic Development in China, VAR, Co-Integration

  JOURNAL NAME: Journal of Service Science and Management, Vol.4 No.4, December 7, 2011

  ABSTRACT: 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.