Foreign Direct Investment and Unequal Regional Economic Growth in China

In principle all neighboring regions should be included. In the empirical estimations,
however, it was only possible to trace the effect, of the neighbor, with the highest
level of foreign direct investments. The neighbor is therefore selected as the neighbor
having the highest DFI.

The estimated equation shows that the poorest regions have the highest investment
multipliers. A given investment thus has higher effects on the growth rate in a poor
region than in a rich region.

The alternative model where the total growth rate was used instead of the annual
growth rate created by the DFI is shown in the appendix 4. The general picture is the
same as above

The high investment areas of Guangdong and Fijian are close to the mean income of
the regions, which implies that their contributions to unequal growth are relative low.

We shall now calculate the DFIs contribution to the distribution of growth on the
Chinese provinces, when the DFI are distributed after the calculations made by the
WLS estimated model (31), where the weights are the regions share of population.

Combined the two estimated models (24) and (31) can now describe the pattern of
converging/diverging growth over the period 1989-1996 by the use of formula (33).

6.3 The Relative Income and the Growth Rate Estimated Directly

The distribution of growth rates after relative income as shown in figure 2 can also as
mentioned be estimated directly by formula (34). This equation was estimated to

DGY = ( .0731887 - .0297396Y + .0016699Y³ - .0001556Y⁴)DSEZ

(1.47)     (-1.36)        (1.73)      (-1.70)

( - 3.444e-05Y + 1.759e-05Y² - 2.672e-06Y³ + 1.258e-07Y⁴

(-3.03)      (2.94)       (-2.68)          (2.36)

+ (- 2.610e-06Y² + 2.841e-07Y³)DSEZ)DY
(-2.20)           (1.45)

(- 1.978e-10Y² + 2.335e-11Y³)DY²

(-2.20)       (1.45)

R² = .1149 Adj.R² = .0706 Obs = 232

13

<<   10   11   12   13   14   15   16   >>

More intriguing information