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Foreign direct investment in China: It's sectoral and aggregate impact on Economic growth

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  • Agya Adi, ATABANI
  • Friday Ogbole, OGBOLE

Abstract

This study focuses on the impact of foreign Direct Investment (FDI) on the economic growth of China via selected sector of the economy. The time frame used is from 1995 to 2010. Times series data drawn from the primary, secondary and tertiary sectors of the economy are used for the analyses. Ordinary least Square multiple linear regression Econometrics models are specified and estimated using E-views statistical software (version7). The Kwiatkowski-Philips-Schmidt-Shin (SPSS) unit root tests for stationary indicates that the variables are stationary at level. The result indicate that there is a negative relationship between FDI and Economic Growth in the primary sector but show a positive relationship in both the secondary and tertiary sectors. However, the aggregate FDI and economic growth shows a positive relationship. We recommend (1) FDI attracting economic policies with greater attention to the secondary and tertiary sectors of the economy; (2) FDI attracting economic policies should pay more emphasis on the secondary sector at the early stage of such policies as this sector exerts growth enhancing spillover effects on other sectors and industries is the economy; (3) Economic policies that de-emphasise FDI into the primary sector as this may exert negative influence on economics growth; (4) Human resource capacity building economic policies that would take advantage of technology transfers and managerial skills acquisition occasioned by such FDI, moreso that some corporations technically deprive the host economies ready access to their advance technologies.

Suggested Citation

  • Agya Adi, ATABANI & Friday Ogbole, OGBOLE, 2013. "Foreign direct investment in China: It's sectoral and aggregate impact on Economic growth," MPRA Paper 62166, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62166
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    References listed on IDEAS

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    1. Ronald Findlay, 1978. "Relative Backwardness, Direct Foreign Investment, and the Transfer of Technology: A Simple Dynamic Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 92(1), pages 1-16.
    2. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
    3. Allan G. B. Fisher, 1939. "Production, Primary, Secondary And Tertiary," The Economic Record, The Economic Society of Australia, vol. 15(1), pages 24-38, June.
    4. Wang, Jian-Ye & Blomstrom, Magnus, 1992. "Foreign investment and technology transfer : A simple model," European Economic Review, Elsevier, vol. 36(1), pages 137-155, January.
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    More about this item

    Keywords

    Foreign Indirect Investment; Sectoral and Aggregate impact; Economic growth in China.;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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