Empirical analysis on the effect of foreign direct investment on the economic growth of Guangdong province

Abstract

The paper studies the relation between FDI and economic growth of Guangdong Province by the time series data of the GDP and FDI of Guangdong Province from 1982 to 2006. Granger causality test shows that there exists a unilateral cause-and-effect relation both them. The co-integration test and error correction model shows that there is longterm dynamic equilibrium relationship both economic growth and FDI in Guangdong province. And Long-term study shows that economic growth and foreign direct investment are positively related.

Keywords and phrases:

• Cointegration test
• Granger causality test
• foreign direct investment
• economic growth