Foreign Direct Investment and Unequal Regional Economic Growth in China

provided by Research Papers in Economics

5 June 1998
C:\Chinajie

The Paradox of Unequal Regional Investment and Equal

Regional Economic Growth in China

Jie Zhang

Research Center of Bornholm

Stenbrudsvej 55, 3730 Nex0,

Denmark

Tel: (45) 5644 1144;

Fax: (45) 5649 4624

Email: jie@rcb.dk

Gustav Kristensen

Institute of Economics

Odense University

DK-5230, Odense M, Denmark

Tel: (45) 6557 2114

Fax: (45) 6595 7766

Emails guk@busieco.ou.dk

Abstract:

China’s policy on Special Economic Zones has attracted direct foreign investment to
China. The investment is very unequally distributed on China’s 30 regions.

The article focuses on the regional economic growth as a result of the direct foreign
investment in the region and its spill-over effects on neighboring regions. The unequal
distribution of foreign direct investment should in principle tends to enlarge the
regional economic differences. The article, however, shows that this is not the result
of the investment.

The empirical findings highlight the impact of foreign direct investment on the
Chinese regional economies in transition.

Paper prepared for the 38^th Congress of the European Regional Science Association
Vienna, 28 August - 1 September.

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