Foreign Direct Investment and Unequal Regional Economic Growth in China

When the right side values are measured as deviations from the mean (indicated by
the prefix D) the mean of the dependent left side variable is equal to the constant
element.

Model 1. A fixed Coefficient Model

GY = α₀ + a₁GI                             (1)

GI = γ₀ + 1d DY                            (2)

where
a₀ - is the autonomous growth rate.

α₁ - the investment multiplier

γ₀ - is the (general ) investment growth for DY = 0, or MGI

γ₁ - indicate the distributions of DFI due to the level of Y

GY = α₀ + αι(γo + γι DY)                                     (3)

^gy = C⅛ ⁺ «1Уо ⁺ «171 ^{dy                                      (4)}

DGY = α₁γ₁ DY                                           (5)

β = «171 > 0 for Y₁ > 0                                             (6)

Model 2. The Multiplier is Included

GY = a₀ + a₁GI                                   (7)

GI = 70 + 71 DY                                  (8)

«1 = «10 ^- «11^DY

GY = aŋ + (аю - a_nDY)(70 + _Ъ DY)                     (9)

GY = a₀ ⁺ a_w70 ⁺ ⅜071^{dy -} O11Y0 ^{dy -} ‰Y1^{dy2             (10)}

DGY = a_w71DY - a_uγ₀DY - «1171DY2                   (11)

Now the distribution of growth on income groups is described by a second degree
polynomial

DGY = («1071 - «1170 )DY - «1171DY2                      (12)

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