Foreign Direct Investment and Unequal Regional Economic Growth in China



= = β0 + β1*Y + β2*Y2 + β3*Y3 + β4*Y4 + β5*Y5

(30)


GI = Y00 + Y1O*Y + Y√Y2 + y√y3 + Y40*y4 + Y√Y5

+ (γ+ T11*Y + Y21*Y2 + Y30*Y3 + Y40*y4 + γ√Y5)DY

+ (‰2 + Y12*Y + Y22*Y2 + Y30*Y3 + Y40*Y4 + Y√Y5)DSEZ       (31)

If the neighbor income again is assumed to be the average income DY2 = o, and
following DY22 = 0, we have the distribution of growth on income groups described
by a third degree polynomial which gives the final expanded form for attracting more
investments, and the final form for distribution and growth.

If

MGI = Yoo + Yιo*Y + Y20*Y2 + Y30*Y3 + Y40*Y4 + Y50*Y5            (32)

that is the investments for DY1 = DY2 = 0.

Then

DGY1 = «00 + («10 - O11DY)GI1

+ β10 10 - «11DY)(«10 α11DY2)GI2

- («00 + («10 - du*0)MGI

+ β10 (⅜0 - ⅜1*0)(α10 - αu*0)MGI)                               (33)

Inserting (31) in (26) we have

GY = K00 + K10*Y + K20*Y2 + K30*Y3 + K40*Y4 + K50*Y5

+ ( κ01 + κ11*Y + k21*Y2 + κ31*Y3 + k41*Y4 + k51*Y5)DSEZ

- (( K02 + K12*Y + K22*Y2 + K32*Y3 + K42*Y4 + K52*Y5 )

+ ( κ03 + κ13*Y + k23*Y2 + κ33*Y3 + k43*Y4 + k53*Y5)DSEZ)* DY

+ ( K04 + K14*Y + K24*Y2 + K34*Y3 + K44*Y4 + K54*Y5)DY2         (34)

and

DGY = ( κ01 + κ11*Y + k21*Y2 + κ31*Y3 + k41*Y4 + κ51*Y5)DSEZ

- (( K02 + K12*Y + K22*Y2 + K32*Y3 + K42*Y4 + K52*Y5 )

+ ( κ03 + κ13*Y + κ23*Y2 + κ33*Y3 + k43*Y4 + κ53*Y5)DSEZ)* DY

+ ( K04 + K14*Y + K24*Y2 + K34*Y3 + K44*Y4 + K54*Y5)DY2         (35)

11



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