How does FDI Affect Economic Growth in China?
Kevin H. Zhang
Illinois State University - Department of Economics; University of Colorado
Economics of Transition, Vol. 9, No. 3, November 2001
How does inward foreign direct investment (FDI) affect a transitional economy? This study attempts to analyze the role of FDI in China's income growth and market-oriented transition. We first identify possible channels through which FDI may have positive or negative effects on the Chinese economy. Using a reasonable growth model and cross-section and panel data in the period of 1984-98, we provide an empirical assessment, which suggests that FDI seems to help China's transition and promote income growth, and that this positive growth-effect seems to rise over time and to be stronger in the coastal than the inland regions.
Keywords: Foreign direct investment, economic growth, and transition
JEL Classification: F21, F23, O53Accepted Paper Series
Date posted: October 15, 2001
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