Study on the Impact of Foreign Direct Investment on Income Gap
|School||Nanjing University of Finance and Economics|
|Keywords||FDI Income Gap Technology Spillover Effect Employment Structure|
Since reform and opening, China’s economic has been developed rapidly, especially the Yangtze River Delta region is becoming a way to make the focus of world attention, Yangtze River Delta region where foreign direct investment is increasing year by year ,which played a significant role in promoting Economic development of the Yangtze River Delta.But as the Yangtze River Delta’s economic has been developped rapidly, income gap is widening, then the income gap in the Yangtze River Delta region, in particular, is the degree of income disparity within the manufacturing industry concerned with the influx of foreign capital? If so, then how the channel which the income gap is affected by foreign direct investment in the manufacturing industry? Foreign direct investment’s impact on the income gap is positive or negative? This series of problems are not only of great theoretical significance, but also are very inportmant for the Yangtze River Delta region which further becomes a gathering of foreign direct investment in one of the major and sustains economic development.This paper studies the income gap at home and abroad about the relationship between FDI and related literature, followed by detailed analysis of the impact of manufacturing FDI income gap mechanism, namely through the employment structure, labor factor, technology spillover effects and to influence the level of foreign trade and other sectors of Manufacturing Income distribution, thus affecting the income gap. Combined with the two provinces and one city in Yangtze River Delta manufacturing FDI and the income gap between the industry status quo, come to the Yangtze River Delta manufacturing FDI and the overall trend of the income gap.Finally, we analyzed of the effect of the impact which is positive or negative of foreign direct investment on income gap in the yangtze river delta from an empirical point of view. In this paper, we use the relevant data from1998 to 2008,in Jiangsu、Shanghai and Zhejiang, and use fixed effects regression model "seems unrelated regression" method. The results show that: FDI impact on manufacturing income gap is significant, and negative correlation, meaning that the influx of FDI in Yangtze River Delta, in particular,FDI invest in the manufacturing sector, to some extent, which inhibited the widening of income gap of manufacturing industry However, Foreign direct investment’s impact on the income gap is not the most important influence, domestic investment in the manufacturing industry in Yangtze River Delta is the uneven distribution, it is the main reason for the widening income gap. And empirical analysis of the Yangtze River Delta provinces, the results show that: FDI of Jiangsu, Zhejiang and Shanghai all shrink the income gap in manufacturing industry, while FDI of ShanghaI is negatively correlated with income inequality, but the impact is not very significant, meaning that the FDI of Shanghai in manufacturing have little effect on the income gap. Finally, the paper combined with empirical analysis results gave the relevant policies and proposals.