The Effect of Inward Foreign Direct Investment on Economic Growth in Chinese Provinces
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171219 09 Supplement for JEST

Keywords

Inward foreign direct investment (FDI)
Economic growth
Chinese provinces
Vector auto-regression estimation

How to Cite

TAGUCHI, H., & WANG, Y. (2017). The Effect of Inward Foreign Direct Investment on Economic Growth in Chinese Provinces. Journal of Economic and Social Thought, 4(4), 387–399. https://doi.org/10.1453/jest.v4i4.1507

Abstract

Abstract. This article examines the effect of inward foreign direct investment (FDI) on economic growth with a focus on Chinese provinces by conducting the Granger causality and impulse response tests in a vector auto-regression (VAR) estimation. The study contributes to the reviewed literature by examining the FDI effect in such comprehensive ways as demand-side and supply-side models, and by clearing the endogeneity problem of targeted variables under a VAR framework. The main findings of this study were as follows. First, the positive effect of FDI on economic growth in Chinese provinces was confirmed by all the model estimations: statistical, demand-side and supply-side models. Second, from the regional perspectives, the positive effect of FDI on economic growth was found in the eastern region, but not in the non-eastern region. Third, no crowding-out effect of FDI on domestic capital formation was identified both in demand-side and supply side analyses

Keywords. Inward foreign direct investment (FDI), Economic growth, Chinese provinces, Vector auto-regression estimation.

JEL. F21, O47, O53.
https://doi.org/10.1453/jest.v4i4.1507
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