Does FDI Boost China's real Economy? Based on Empirical Evidence at the Provincial Level
Keywords:
FDI; REAL; Mediating Effect; Threshold Model.Abstract
Based on the provincial panel data from 2003 to 2020, this paper studies the influence of foreign direct investment (FDI) on the development of real economy (REAL) by using the mediating effect and threshold effect model. The results are as follows: First, FDI has an obvious pulling effect on Chinese real economy, and this pulling effect shows obvious regional difference in the eastern, middle and developed areas. Second, the empirical analysis of the mediating effect of FDI shows that the influence of FDI on China's high-quality development is mainly caused by "market size (MS)", "innovation ability of real enterprises (IC)", "economies of scale (ECG)" and other factors, and ECG is more obvious. Third, through the in-depth study of the "threshold" effect, the results show that: The promotion effect of FDI on China's REAL is different due to environmental regulation (ER), government intervention (GI) and other factors. The reason is that there is an irrational government behavior in China at present, which leads to the wrong allocation of resources. However, when China's policies are too involved, the pulling effect of FDI on REAL will be weakened. And as for the regions with better talent resource, FDI's promotion on REAL of our country is relatively remarkable, which may be due to the fact that local governments have issued a lot of favorable policies to solicit talents.
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