Regional analysis of the impact of inward foreign direct investment on economic growth in the Chinese electronic industry

Abstract

This article empirically investigates the impact of inward foreign direct investment (FDI) on regional economic growth in the Chinese electronic industry (CEI). Utilizing a provincial-level panel data spanning the period 1989 to 2009, we specify and estimate an endogenous economic growth model for the CEI. Empirical results indicate that, for the coastal region, FDI inflows have been growth enhancing, while in the central and western regions the impact of FDI on economic growth is mixed, depending on the channel of capital flow. Results also indicate that exports, human capital, science and technology investment and fixed asset investment are growth enhancing, while unemployment and foreign R&D investment are growth impeding in the CEI.

Keywords:

• foreign direct investment
• locational factors
• FDI spillover channels
• economic growth
• the Chinese electronic industry

JEL Classification:

• C23
• F21
• O11
• O18