IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/62166.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/62166/1/MPRA_paper_62166.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    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. 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.
    4. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    2. Sbia, Rashid & Shahbaz, Muhammad & Hamdi, Helmi, 2014. "A contribution of foreign direct investment, clean energy, trade openness, carbon emissions and economic growth to energy demand in UAE," Economic Modelling, Elsevier, vol. 36(C), pages 191-197.
    3. Marin, Anabel & Sasidharan, Subash, 2008. "The Heterogeneity of MNC' Subsidiaries and Technology Spillovers: Explaining positive and negative effects in emerging economies," MERIT Working Papers 2008-066, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Della Temenggung, 2007. "Productivity Spillovers from Foreign Direct Investment: Indonesian Manufacturing Industry’s Experience 1975-2000," DEGIT Conference Papers c012_048, DEGIT, Dynamics, Economic Growth, and International Trade.
    5. Fernando Ubeda & Francisco Pérez-Hernández, 2017. "Absorptive Capacity and Geographical Distance Two Mediating Factors of FDI Spillovers: a Threshold Regression Analysis for Spanish Firms," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 1-28, March.
    6. Sapienza, Elvira, 2010. "FDI and Growth in Eastern Europe: A Sectoral Analysis - Investimenti diretti e crescita in est-Europa: un’analisi settoriale," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 63(4), pages 451-475.
    7. Rosemary Stanley Taylor, 2020. "Foreign direct investment and economic growth. Analysis of sectoral foreign direct investment in Tanzania," African Development Review, African Development Bank, vol. 32(4), pages 699-717, December.
    8. Anabel Marin & Martin Bell, 2006. "Technology spillovers from Foreign Direct Investment (FDI): the active role of MNC subsidiaries in Argentina in the 1990s," Journal of Development Studies, Taylor & Francis Journals, vol. 42(4), pages 678-697.
    9. Crespo, Nuno & Fontoura, Maria Paula, 2007. "Determinant Factors of FDI Spillovers - What Do We Really Know?," World Development, Elsevier, vol. 35(3), pages 410-425, March.
    10. Cesare Imbriani & Filippo Reganati, 1999. "Productivity spillovers and regional differences: some evidence on the italian manufacturing sector," CELPE Discussion Papers 48, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    11. Maria Cipollina & Giorgia Giovannetti & Filomena Pietrovito & Alberto F. Pozzolo, 2012. "FDI and Growth: What Cross-country Industry Data Say," The World Economy, Wiley Blackwell, vol. 35(11), pages 1599-1629, November.
    12. Fredrik Sjoholm, 1999. "Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 53-73.
    13. Agarwal, Natasha & Milner, Chris & Riaño, Alejandro, 2014. "Credit constraints and spillovers from foreign firms in China," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 261-275.
    14. Hui Wang & Huifang Liu, 2017. "An Empirical Research of FDI Spillovers and Financial Development Threshold Effects in Different Regions of China," Sustainability, MDPI, vol. 9(6), pages 1-21, June.
    15. Piotr Ciżkowicz & Magda Ciżkowicz-Pękała & Piotr Pękała & Andrzej Rzońca, 2017. "The effects of special economic zones on employment and investment: a spatial panel modeling perspective," Journal of Economic Geography, Oxford University Press, vol. 17(3), pages 571-605.
    16. Natasha Agarwal & Chris Milner & Alejandro Riaño, 2011. "Credit Constraints and FDI Spillovers in China," Discussion Papers 11/21, University of Nottingham, GEP.
    17. Argentino Pessoa, 2008. "Multinational Corporations, Foreign Investment, and Royalties and License Fees: Effects on Host-Country Total Factor Productivity," Notas Económicas, Faculty of Economics, University of Coimbra, issue 28, pages 6-31, December.
    18. Santangelo, Grazia D., 2018. "The impact of FDI in land in agriculture in developing countries on host country food security," Journal of World Business, Elsevier, vol. 53(1), pages 75-84.
    19. Marijke J. D. Bos & Gonzague Vannoorenberghe, 2018. "Total factor productivity spillovers from trade reforms in India," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 549-606, May.
    20. Muhammed BENLI, 2016. "FDI and export spillovers using Heckman’s two step approach: Evidence from Turkish manufacturing data," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 315-342, Winter.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:62166. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.