Research on Economic Development Stage and Marginal Effects of Trade and FDI on Economic Growth in China

Limin Yao, Chaobo Bao, Junliang Yu


Since reform and opening up. exports and FDI, as two main internationalization patterns, successfully promote China's economic growth and increase the per capita income. In the mean time, it widens the regional economic gap. Whether exports and FDI are still two engines to promote China’s economic growth in a new stage of development? This paper collects provincial panel data from 1987 to 2010 in China with three economic areas, the east, the middle, and the west, and divides them into two periods, before entry into WTO and after, to study the stage of economic development’s growth effect on trade and FDI empirically. It concludes that the developed eastern area’s exports have the strongest promotion effect on economy, but its promotion effect is weakening now and weaker than the imports’ promotion effect which is still increasing now, in the compared undeveloped mid and west of China. Furthermore, FDI’s growth effects on all the three economic areas are increasing. In a word, foreign trade and FDI’s growth effects change periodically in the different stages of development, so the policy mix of trade and FDI need to be adjusted with economic development.

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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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