FOREIGN INVESTMENT AND REGIONAL ECONOMIC DEVELOPMENT IN CHINA

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FOREIGN INVESTMENT AND REGIONAL ECONOMIC DEVELOPMENT IN CHINA

Since 1979, the Chinese economy has experienced a widening economic disparity between the Eastern and Western Regions. One important factor contributing to the increased inter-regional disparity is direct foreign investment (DFI). This paper conducts an empirical investigation of the impacts of DFI on the regional economic development of China. Regression analysis indicates that the impact of DFI on economic growth was stronger in the Eastern (coastal) Region and very weak in the Western (far inland) Region, hence reinforcing the inter-regional economic disparity. Many other factors also contributed to the widening gap.