Function simulation of FDI, foreign trade and regional GDP in China
Journal of Chinese Economic and Foreign Trade Studies
ISSN: 1754-4408
Article publication date: 3 October 2008
Abstract
Purpose
The purpose of this paper is to simulate the function of foreign trade, foreign direct investment (FDI) and regional gross domestic product (GDP) in China, explore how these two variables affect regional GDP together and provide evidence to export‐led growth (ELG) and FDI‐led growth.
Design/methodology/approach
Artificial neural network (ANN) is introduced in the model. This nonlinear and adaptive computation obtains a three‐dimension function that is different from linear models.
Findings
New evidence was found for ELG and FDI‐led growth with data of 28 regions in China in the period of 1994‐2005. The simulation reveals that with foreign trade and FDI scale varying, marginal GDP in different Chinese regions is positive. Because of the nonlinear system, a wave pattern of marginal GDP was found and an optimal scale of foreign trade and FDI for Chinese regions. Results in the simulation also indicate the possibility of economic deconcentration in some Chinese regions.
Originality/value
New evidence is provided for ELG and FDI‐led growth. Different from conventional methods, ANN model as a nonlinear system is introduced in the study in which optimal scale of foreign trade and FDI for Chinese regions is obtained.
Keywords
Citation
Ying, L. and Riming, C. (2008), "Function simulation of FDI, foreign trade and regional GDP in China", Journal of Chinese Economic and Foreign Trade Studies, Vol. 1 No. 3, pp. 232-243. https://doi.org/10.1108/17544400810912383
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited