How foreign investments contribute to economic growth of industrial parks in China: a production-frontier decomposition approach

ABSTRACT

We study the importance of foreign direct investment for economic growth of 52 Chinese industrial parks from 2007 to 2015. For this task, we extend a production-frontier methodology, specially designed to decompose economic growth into different sources, to take two types of capital into account. Our results reveal that foreign capital is necessary for boosting economic growth of the parks, but domestic capital played the main role.

KEYWORDS:

• Economic growth
• decomposition
• foreign capital
• industrial parks
• China

JEL CLASSIFICATION:

• O10
• E00
• C61

Acknowledgements

We thank the Editor David Peel and the anonymous referee for their comments that have improved the article substantially. We also thank Jiajun Liu, Shuyi Liu, Ruida Song, Shiyun Zhang and Jiawei Xiong for their help with the data collection process.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ As given by the Department Investment Administration of the Ministry of Commerce of China.

² Note that it is straightforward to extend the decomposition to other assumptions on the production function (as e.g. nonconvexity, variable returns-to-scale).

Additional information

Funding

This work was supported by the National Natural Science Foundation of China : [Grant Number 71750110539].