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iBusiness, 2010, 2, 377-381 doi:10.4236/ib.2010.24049 Published Online December 2010 (http://www.scirp.org/journal/ib) Copyright © 2010 SciRes. iB The Economic Growth Effect of Logistics Industry FDI Analysis Yang Wang1, Luqian Wang2 1School of Management Dalian Jiaotong University, Dalian, China; 2Sun Wah International Business School of Liaoning University, Liaoning, China. E-mail: wangyang@djtu.edu.cn, wangluqian@dl.cn Received June 12th, 2010; revised August 28th, 2010; accepted October 7th, 2010. ABSTRACT Based on the direction of the international FDI changed, from manufacturing to service industries, we should concern about the influence of the introduction of China’s logistics industry FDI to the national economy. The paper sets up regression model to examine logistics FDI and GDP in two aspects of time series and growth rate, we find that the lo- gistics FDI reaches a high correlation with GDP, and logistics FDI is one of the major driving forces of economic de- velopment. Therefore, China should expand the introduction of logistics FDI, improve the quality of foreign investment, develop the positive economic growth effect of logistics FDI and promote the change of China’s economic growth pat- tern to ensure the development of China’s economy. Keywords: Logistics, FDI, GDP, Effect 1. Introduction 1.1. International Research Jordan Shan [1] used vector autoregressive method to research the relationship between China’s FDI and eco- nomic growth, and used the variance and impulse re- spond function to analyze the interaction between FDI and economic growth. Concluded that: economic growth and FDI exist the relationship of two-way causality and the impact of the economic growth on FDI is greater than the impact of FDI on economic growth; the inflow of FDI accelerates the difference between eastern and west- ern areas; the exchange rate doesn’t affect FDI in China. Cheng Lsiao used VAR method to analyze the total time series of China and other 23 developing countries, and concluded that: the relationship between GDP and FDI is promoting interaction; except for economic factors, sta- ble and reliable organization and the development of urbanization have a great influence on the introduction of FDI, which are an important factor in promoting eco- nomic growth. Sinica Kusic emphasized the importance of FDI to Croatian economy. Author analyzed the influ- ence of FDI to economic growth in the period of transi- tion by the regression and the experience of the similar countries (e.g. Hungary), providing that the influence of FDI to the economic growth of Croatia, especially in transition period. Chandana Chakraborty and Parantap Basu [2] used cointegration and error correction model to research on the relationship between India’s FDI inflow and eco- nomic growth. They thought: FDI and GDP exist long- run equilibrium; the share of unit labor cost and import tax in revenue influences the long-term relationship be- tween FDI and GDP. 1.2. Demastic Research 1) The research on FDI and economic growth effect. Li Yining put forward the influence of FDI to China’s eco- nomic growth in “China’s economic growth and fluctua- tions”, which can be divided into direct and indirect ef- fects. Direct effect is the impact of FDI on China’s capi- tal formation, and the impact of the productive capacity of FDI on national income. Indirect effect is the impact on exports, technological progress and the demonstration effect, but the theory and data are inadequate. Xia Jing- wen proposed that FDI promotes economic growth in five aspects. First, FDI compensates China’s funding gap. Second, FDI promotes the technological progress. Third, FDI improves and enhances the trade structure. Fourth, FDI produces the employment effect. Fifth, FDI contrib- utes to China’s institutional change. Meawhile Xia Jing- N ote: This paper is the part of the results of science and technology p rojects in Liaoning Province, Number [2009401011], contract number [2009040148-304]. The Economic Growth Effect of Logistics Industry FDI Analysis Copyright © 2010 SciRes. iB 378 wen also proposed that FDI has a negative effect on China’s economic growth. Restrict the improvement of international competitiveness of Chinese industries by equity, brand, technology and market control; reduce the external solvency of China’s current by physical and technological investment; increase the money supply and inflationary pressure. He analyzed more thoroughly on the influence of FDI to economic growth, but remained in the qualitative analysis. Chen Jiyong, Xiao Weiguo and Wang Qingping discussed the influence of national direct investment to investor, the host country and the world economy from theoretical and empirical aspects, analyzed since 1980s the development of FDI and the impact on China’s economic development, and con- cluded since reform and opening up the basic experience and the main problems of using FDI. In above studies, some analyze from the point of the investor (TNC), some from the evaluation of the host country, and these analysis and evaluation are discussed since 1980s in the large environment of the overall de- velopment of international direct investment and eco- nomic development, so it has a strong generality and sense of the times. The choice of FDI industry in devel- oped counties depends on the technical capabilities and competitiveness of developing countries, if the technical capabilities and competitiveness of developing countries are stronger, developed countries tend to transfer more advanced technology to developing countries. Whether FDI can bring technological progress and economic growth to developing countries, it relies on human capi- tal accumulation. Only accompanied by a faster accumu- lation of human capital, FDI can bring technological progress and economic growth to developing countries. 2) Services FDI and economic growth effect. The lit- erature of services FDI of economic growth effect is lim- ited [3]. Chinese scholars use different methods to get some useful conclusions. The unit root test, cointegration test and Granger causality test are used most. He Meiy- ing, Dau Feng and Hu Yun all used these methods and related data to examine the relationship between China service industry and services growth of FDI, and achiev- ed the similar conclusions, which are that services FDI is the reason of the growth of China services, but reverse is not that. Zha Donglan, Wu Xiaolan used 1998- 2003 data from the various service industries in Jiangsu province, and got the conclusion that FDI in the major industry of services has different effects on industry economic growth, in which introducing foreign investment to real estate makes great contribution to regional GDP, fol- lowed by logistics industry (transport, storage, commu- nications), scientific research and integrated technical services, and social services isn’t significant impact on regional GDP. Wang Xinhua used the fixed effects model and 1997-2005 data from the various industries of services to do long-term and short-term effects analysis, and the result showed that services FDI has a certain economic growth effect, but quite different in different periods of time. Wei Zuolei used an extended C-D pro- duction function to estimate the average contribution rate of FDI to the growth of China’s agriculture, industry and services, and the result showed that the average contribu- tion rate of FDI to China’s industry is far more than ag- riculture and services, and the average contribution rates of industry, services and agriculture are respectively 3.69%, 0.37% and 1.48%. According to available data, Jiang Xiaojuan [4] estimated that 2001 and 2002 contri- bution rate of FDI enterprises to services growth are 17.6%, 17.3%, much lower than the industry. (2001 and 2002, in the total growth of national industrial added value, the contribution rate of FDI enterprises are respec- tively 39.1%, 39.8%). 2. Logistics Industry FDI and China’s Economic Growth 2.1. The Correlation Analysis of Logistics Industry FDI and GDP Based on 1998-2008 statistical data from “China statisti- cal yearbook” [5], we do the correlation analysis and time series analysis for the relationship between logistics FDI and China’s economic growth, analyze the internal relationship between the growth of logistics FDI and China’s economic growth, and argue the effect of logis- tics FDI to China’s economic growth. According to the availability of China’s public data, this part chooses the most representative data of Chinese third-party logistics to analyze (see Table 1). Investigate the influence of logistics FDI (TFDI for short) to GDP, TFDI as explanatory variable, GDP as dependent variable, and use the regression equation for quantitative analysis to research the relationship of both. First, according to 1997-2007 data, calculate the correla- tion coefficient between two variables, that is r = 0.52, and two variables exist certain correlation, but not sig- nificant. This is mainly because before 2005 logistics FDI in China also has policy restrictions, not open the whole industry, and policy barriers lead to low foreign investment. The input of manufacturing industry to lo- gistics is calculated to the manufacturing industry, and the data before 2005 can’t fully reflect the fact of logis- tics FDI. Therefore, consider the effectiveness and com- prehensiveness of data, select 2007 data of “China statis- tically ear book” to establish the empirical formula be- tween the two, set X as the stock of FDI, Y as GDP, and the regression equation is: YX (1) The Economic Growth Effect of Logistics Industry FDI Analysis Copyright © 2010 SciRes. iB 379 Table 1. 1997-2007 China’s GDP and transport industry FDI. Year The actually used FDI of transport, storage and communications (thousand dollars) GDP (billion yuan) 1997 1655130 7897.30 1998 1645130 8440.23 1999 1551140 8967.71 2000 1011880 9921.46 2001 908900 10965.52 2002 913460 12033.27 2003 867370 13582.28 2004 1272850 15987.83 2005 1812300 18321.74 2006 1984850 21192.35 2007 2006760 24952.99 Source: 1998-2008 China statistical yearbook In the equation, , as to be estimated coeffi- cients, as random error term, use the above statistics to estimate the equation, and the estimated result is: Y = 39757.38 + 0.91X (Table 2). In the regression equation, the degree of freedom is 9, the critical value F (1,9) = 5.12,while the test value F is 39.5,F > F (1,9), which shows that the general linear equa- tion is significant in the 95% level; 8877.0 2R shows that the goodness of fit between TFDI and GDP is higher. The regression equation illustrates that China’s logistics industry increases 10000 dollars in FDI which will increase 91 million yuan in GDP, in another words, the need effect of logistics FDI to the current GDP is obvious (Table 3). 2.2. The Time Series Analysis of TFDI and GDP FDI to economic growth primarily produces two effects, namely short-term demand-pull effect and long-term supply effect. Use GDP over the years as independent variable, the FDI (100 million U.S. dollars) of transpor- tation, storage and telecommunications as explanatory variable, do the econometric tests (samples interval 2001-2007) from the perspective of time series analysis, do the correlation analysis by SPSS, use the multiple lag distribution model to do the econometric tests, so the regression equation is: Table 2. The parameter estimates and the test values of simple linear regression. Variable Coefficient Std. Error t-Statistic Prob. C 39757.38 21472.98 1.851507 0.1233 TFDI 0.913387 0.145319 6.285411 0.0015 R-squared 0.887657 Mean dependent var 167194.3 S.E. of regression 18710.57 Akaike info criterion 22.74652 Log likelihood -77.61282 F-statistic 39.50640 Dependent Variable: GDP; Method: Least Squares; Sample: 2001 2007; Included observations: 7. Table 3. The parameter estimates and the test values of multiple linear regression. Variable CoefficientStd. Error t-StatisticProb. C 34933.252583.991 13.519110.0470 TFDI 0.5898030.031704 18.603270.0342 TFDI (–1) –0.1616910.049241 –3.2836800.1882 TFDI (–2) 0.7063880.038627 18.287360.0348 R-squared 0.999804Mean dependent var 188074.4 S.E. of regression1244.890Akaike info criterion17.08204 Log likelihood –38.70511F-statistic 1697.659 Dependent Variable: GDP; Method: Least Squares; Sample (adjusted): 2001 2005; Included observations: 5 after adjusting endpoints. 123 14 2 GDPTFDI TFDITFDI (2) In the regression equation, Y(GDP) is the increased amount of China’s economy, X(TFDI) is the current use of foreign investment in logistics industry, and X with subscripts −1, −2 represent the year before, two years before the foreign investment. Here, the current FDI variable is to explain the short-term demand-pull effect of foreign investment, while the lagged variables are to explain the long-term supply effect of foreign invest- ment. The result of OLS by statistical analysis shows that t-significance probability of FDI-1 is 0.1882, higher than 0.05, which is not significant difference from 0, indicat- ing that FDI-1 shouldn’t appear in the equation. And, t- significance probability of the constant term, TFDI and TFDI-2 are 0.047, 0.0342 and 0.0348, all less than 0.05, indicating that the constant term, TFDI and TFDI-2 are significant difference from 0, so they should appear in the equation as explanatory variables, the model 1 is: 2 39561.20 0.50.5979GDPTFDI TFDI (3) The previous econometric analysis from the perspec- tive of multi-lagged analysis model examines the impact of using foreign investment on the economic growth. The results of OLS from models shows that as R-squared value is high, indicating that the model has better good- ness of fit, and T values and F values also reach the sig- nificant level, so the model is reasonable and effective. The model shows that logistics FDI increases 10000 dol- lars in the same year which will increase 50 million yuan in GDP (Table 4). In order to understand well the demand effect and sup- ply effect of logistics FDI, choose FDI and lagged vari- ables as explanatory variables, use the same sample data and the lag distribution model in the form of logarithm to do the econometric test, so the model 2 is: 2 2.996797 0.4130840.361457LnGDPLnFDI LnFDI (4) The Economic Growth Effect of Logistics Industry FDI Analysis Copyright © 2010 SciRes. iB 380 Table 4. The parameter estimates and the test values of multiple linear regression model 1. Variable Coefficient Std. Error t-Statistic Prob. C 39561.20 5256.804 7.525713 0.0172 TFDI 0.500100 0.039054 12.80523 0.0060 TFDI (-2) 0.597900 0.048575 12.30880 0.0065 R-squared 0.997687 Mean dependent var 188074.4 S.E. of regression 3021.591 Akaike info criterion 19.14866 Log likelihood –44.87166 F-statistic 431.3323 Dependent Variable: GDP; Method: Least Squares; Sample (adjusted): 2001 2005; Included observations: 5 after adjusting endpoints. Table 5. The parameter estimates and the test values of multiple linear regression model 2. Variable Coefficient Std. Error t-Statistic Prob. C 2.996797 0.350559 8.548623 0.0134 LOG(TFDI) 0.413084 0.030950 13.34665 0.0056 LOG(TFDI (–2)) 0.361457 0.035572 10.16135 0.0095 R-squared 0.997153 Mean dependent var 12.12220 S. E. of regression 0.017886 Akaike info criterion –4.925880 Log likelihood 15.31470 F-statistic 350.1868 Dependent Variable: LOG (GDP); Method: Least Squares; Sample (ad- justed): 1997 2004; Included observations: 5 after adjusting endpoints. In this equation, F(350.1868) passes the examination, and the regression effect is remarkable, which shows that explanatory variables (the FDI of transport, storage and telecommunications) has a higher interpretation level to the independent variable (GDP),with the overall linear. Meanwhile, in the regression equation, the determination coefficient 2 R and correlation coefficient R are high, indicating that the economic growth extremely depends on logistics FDI (Table 5). The test of econometric analysis of model 2 meets the requirements, so it’s effective. The model means that logistics FDI increases 1% which promotes economic growth 0.413%. The results of econometric test show that the need effect of FDI to the economic growth is evident. Because logistics FDI generally can’t produce supply effect that year, so lagged two years international investment similarly replaces multi-lag distribution model, to analyze the supply effect of logistics FDI. The results of quantitative analysis show that logistics FDI increases 1% which will bring 0.361% of the supply ef- fect, so the growth effect of logistics FDI to economic growth is obvious. The parameters of the above equation pass the signifi- cant test, and 2 R reaches 0.997, indicating that the ex- plainable function of the equation is strong. From the model of adding lagged variables, we can see that the effect of one-year lag is not clear, and this may be be- cause after logistics FDI enters China, its demand-pull makes contribution on that year, in the period of initial development the supply effect doesn’t make much con- tribution on the following year. During two years devel- opment, the supply effect comes into play that makes a large contribution to GDP, so the two-year lag coeffi- cient is quite significant. 2.3. The Relationship between the Growth Rate of Logistics FDI and China’s Economy From 1997-2007 the volatility cycle of logistics FDI and GDP, the growth of logistics FDI is identical with the trend of GDP, and the contribution of China’s national economy has increased annually. Based on 1997-2007 data of the growth of logistics foreign investment and China’s economy, their relationship is done correlation analysis, regression analysis, reflecting the internal rela- tionship between the growth of logistics FDI and eco- nomic growth (Table 6). 1) Correlation analysis. Use the growth rate of GDP as economic growth rate, 1997-2007 data as the sample period, research the changing relationship between China’s economic growth and FDI growth, and by SPSS we know that the changing relations between the two is 4454.0),( gG , which shows that the correlation be- tween China’s economic growth and logistics FDI is weak. And the promotion of logistics industry FDI to China’s economic growth is not significant, which is different from the verification in China’s economic de- velopment. By analyzing 1997-2007 the economic situa- tion and foreign investment of the major FDI home countries, we find that 2000, in the United States, Britain, Canada, Japan and western Europe the network technol- ogy bubble burst, stock prices plummeted and economic was slow-down. The end of 2001, the original world en- ergy giant Enron closed down because of false account- ing, more than 20,000 unemployed. Then the United States broke out 9.11, so in 2000-2003, the world FDI severely reduced. But China’s economy keeps increasing, the reason is that the expansion of domestic demand and relatively strict capital accounts. In this period, the in- flows of FDI become smaller with economic crisis, thus it reduces the correlation between the growth rate of China’s economy and FDI growth rate. Therefore, in the following regression analysis, exclude data from 2001- 2003, in order to more accurately reflect the correlation between variables. 2) Regression analysis. Using the data from the above table to do the multiple regression analysis by SPSS, all the selected variables are forced into the regression, the economic growth rate as independent variable, GDP, total investment in fixed assets, the use of foreign in- vestment, the share of foreign investment, and the growth rate of foreign investment as explanatory variables, sample The Economic Growth Effect of Logistics Industry FDI Analysis Copyright © 2010 SciRes. iB 381 Table 6. 1997-2007 the growth rate of China’s economy and the related factors of logistics industry. Year Economic growth rate (%) GDP (10 million yuan) The scale of fixed assets in- vestment in logistics industry (10 million yuan) ① The actually used foreign investment in transport (10 thousand dollars) The actually used foreign investment in transport (10 thousand dollars) The growth rate (%) 1997 9.3 78973.0 2367.2 165513 3.66 — 1998 7.8 84402.3 3401.6 164513 3.62 –0.60 1999 7.6 89677.1 3533.5 155114 3.85 –5.71 2000 8.4 99214.6 3554.7 101188 2.49 –34.77 2001 8.3 109655.2 3956.4 90890 1.94 –10.18 2002 9.1 120332.7 4553.6 91346 1.73 0.50 2003 10.0 135822.8 5594.4 86737 1.62 –5.05 2004 10.1 159878.3 7570.6 127285 2.10 46.75 2005 10.4 183217.4 9293.1 181230 3.00 42.38 2006 11.6 211923.5 1269.4 198485 3.15 9.52 2007 11.9 249529.9 14281.0 200676 2.68 1.10 Source: ○ 1 Narional data center; other data from 1998-2008 “China statistical yearbook”. Table 7. The parameter estimates and the test values of multiple linear regression model. Variable Coefficient Std. Error t-Statistic Prob. C 9.308897 0.787260 11.82443 0.0000 Investment in fixed assets –7.15E-05 6.83E-05 –1.047749 0.3351 Use of foreign investment 5.08E-05 8.83E-06 5.748461 0.0012 The growth rate of foreign investment –0.002186 0.009426 –0.231867 0.8243 The proportion of foreign investment –2.442980 0.461542 –5.293085 0.0018 R-squared 0.903043 Mean dependent var 9.500000 Log likelihood –6.314866 F-statistic 13.97074 Durbin-Watson stat 2.401482 Prob (F-statistic) 0.003381 Dependent Variable: GR; Method: Least Squares; Sample: 1997 2007; Included observations: 11. period of 1997-2007,then the regression equation is: Economic growth rate 21 )( G investment in fixed assets +3 use of foreign investment +4 the proportion of foreign investment+5 the growth rate of foreign investment+ , we can get the estimated results as below (Table 7). In the regression equation, F (13.97) passes the test and the regression effect is significant, which shows that independent variable (the growth of logistics FDI) has a higher interpretation to explanatory variable (economic growth rate), with general linear. Meanwhile, the deter- mination coefficient R2 = 0.903043 is quite high in the regression equation, indicating that China’s economic growth largely depends on logistics FDI. 3. Conclusions First, from time series and growth rate, logistics FDI is highly relevant to China’s economic growth, which is the major factor and driving force of China’s economic growth. Second, China should continue to increase the intro- duction of foreign investment and logistics supply, to protect national economic development. Third, China should improve the quality of FDI, pro- mote the optimization and upgrading of logistics struc- ture and economic transition, to promote the economic development. 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