Foreign Direct Investment and Unequal Regional Economic Growth in China

Model 3. The Spill-Over Effect

2= = β10 («10 ⁺ αιιD^γXc⅛o ⁺ «11DY2)                         (16)

The point of departure for calculating β is now

GY = «0 + (α_w - a₁₁DY)GI + β_w (a_ω + a_uDY)(a_w + ⅛DY2)GI2      (17)

GY = «0 + (a_w - a_nDY)(γ0 + 71 DY)

+ β_ω (a_w + a_uDY)(a_w + a_nDY2)(γ0 + γ_υDY2)              (18)

^gy = C⅛ ⁺ O1070 ⁺ CW1^{dy -} O11Y0 ^{DY - a}11Y1DY²

+ β₁0 (a10 - a_nDY1)(a10 - a11DY2)(γ0 + γ1DY2)                    (19)

If the neighbour income is assumed to be the average income DY₂ = 0 we have

^gy = C⅛ ⁺ O1070 ⁺ CW1^{dy -} O11Y0 ^{DY -} CW1^dy2

⁺ β10 (»10 ^- ⅜1D^γ1)CW0                                        (²⁰)

^gy- (c⅛ ⁺ a_w70 ) ^- β10CC10a10γ0 = <⅞7∣ D^{γ -} »1170^DY- ‰7∣^dy'
- β₁0 a_na10γ0DY                                          (21)

DGY = («1071 - «1170 - β10a_na1070)DY - an71DY²              (22)

Model 4. Attraction with Declining Force and Other Factors

GY = a₀ + a₁GI + a₂GI₂                             (23)

GI = ‰ + (У10 + Yu DY)DY + 73DOPEN                (24)

a₁ = a₁₀ - a₁₁DY                                      (25)

»2 = β10 (»10 ^- »11^DY)(»10 ^- »11^DY2)                             (²6)

У = ‰ + Yu DY                           (27)

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