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Abstract
This article presents two propositions on the role of FDI in economic growth: (1) FDI is a mover of production efficiency and (2) FDI is a shifter of the host country's production frontier. It then employs a production function with a large panel data set from the Chinese regions over 1979–2003 to test the propositions.
Notes
1 The mean value of ln(FDI/(DI + FDI)) is 0.182, multiplying this by the long-run elasticity of 0.032 gives a value of 0.58%.