Foreign Direct Investment and Economic Growth: Theory and Application to China

Posted: 24 Feb 2001

See all articles by Jean-Claude Berthelemy

Jean-Claude Berthelemy

Université Paris I Panthéon-Sorbonne - Department of Economics

Sylvie Démurger

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Abstract

The paper investigates the relationship between foreign direct investment and economic growth. A model of endogenous growth first highlights the transfer of foreign technology as a key determinant of economic growth, and suggests that economic growth may conversely influence the inflows of foreign capital. Simultaneous-equation model estimation based on a sample of 24 Chinese provinces, from 1985 to 1996, confirms the fundamental role played by foreign investment in provincial economic growth in China, and stresses the importance of potential growth in foreign investment decisions.

JEL Classification: F31, O16, O53, P21

Suggested Citation

Berthelemy, Jean-Claude and Démurger, Sylvie, Foreign Direct Investment and Economic Growth: Theory and Application to China. Available at SSRN: https://ssrn.com/abstract=237056

Jean-Claude Berthelemy (Contact Author)

Université Paris I Panthéon-Sorbonne - Department of Economics ( email )

12 place du Panthéon
Paris, IL
France

Sylvie Démurger

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France
(33 4) 72 86 61 05 (Phone)
(33 4) 72 86 60 90 (Fax)

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