Foreign Direct Investment and Unequal Regional Economic Growth in China



Model 3. The Spill-Over Effect

GY = a0 + a1GI + a2GI2
GI = 70 + 71 DY

(13)

(14)

«1 = «10 - anDγ

(15)

2= = β10 10 + αιιDγXc⅛o + «11DY2)                         (16)

The point of departure for calculating β is now

GY = «0 + (αw - a11DY)GI + βw (aω + auDY)(aw + ⅛DY2)GI2      (17)

GY = «0 + (aw - anDY)(γ0 + 71 DY)

+ βω (aw + auDY)(aw + anDY2)(γ0 + γυDY2)              (18)

gy = C⅛ + O1070 + CW1dy - O11Y0 DY - a11Y1DY2

+ β10 (a10 - anDY1)(a10 - a11DY2)(γ0 + γ1DY2)                    (19)

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

gy = C⅛ + O1070 + CW1dy - O11Y0 DY - CW1dy2

+ β10 10 - ⅜1Dγ1)CW0                                        (20)

gy- (c⅛ + aw70 ) - β10CC10a10γ0 = <⅞7 Dγ - »1170DY- ‰7dy'
- β
10 ana10γ0DY                                          (21)

DGY = («1071 - «1170 - β10ana1070)DY - an71DY2              (22)

Model 4. Attraction with Declining Force and Other Factors

GY = a0 + a1GI + a2GI2                             (23)

GI = ‰ + 10 + Yu DY)DY + 73DOPEN                (24)

a1 = a10 - a11DY                                      (25)

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

У = ‰ + Yu DY                           (27)

23



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