부산대학교 도서관

Since the reform and opening up, China has achieved great economic development. Accompanying the rapid growth of its economy, the foreign direct investment (FDI) flow into China also increased greatly, which contributed much to these economic changes. Usually, there are two channels through which FDI can influence the economic growth of a host country. First, via the “spillover effects” of FDI, the productivity of local firms may be increased, thus enlarging exports, investments, and production. Second, with an inflow of foreign capital, not only domestic investment, but also production and employment increases as a result of capital accumulation. Many studies have been conducted to determine and explain the spillover effect of foreign direct investment in China. This paper aims to conduct an empirical analysis to determine out the effects of FDI at the level of Chinese sub-cities. This paper used three dependent variables – GDP, industrial output, and industrial sales – and the FDI variable showed significant positive effects on these three dependent variables. The actual utilized FDI is used to measure the presence of FDI, and it played a significant positive role on economic growth at a sub-city level in China. Regarding the internal factors affecting the spillover effect, besides the often used variables, such as Employment (represented by the unemployment rate and showed significant negative effect on economic development in China), Human quality (the education level, measured by the over high school-educated population of the total population showed positive effect on GDP, industrial output and sales value), Assets (the investment share of total fixed assets that positively affects the three dependent variables), the not-often-used variable infrastructure was also examined. A significant effect of infrastructure was only found on the dependent variable GDP, and no effect was found on the dependent variables INDOUT or SALE. Besides, not much attention has been paid to the policy factor of Special Economic Zones. This paper examined this policy factor and the results showed that it had significant positive effects on the industrial sales value but not on dependent variables GDP or industrial output.