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.
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-
ote: This paper is the part of the results of science and technology
rojects in Liaoning Province, Number [2009401011], contract number
The Economic Growth Effect of Logistics Industry FDI Analysis
Copyright © 2010 SciRes. iB
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:
 (1)
The Economic Growth Effect of Logistics Industry FDI Analysis
Copyright © 2010 SciRes. iB
Table 1. 1997-2007 China’s GDP and transport industry FDI.
The actually used FDI of transport,
storage and communications
(thousand dollars)
(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-
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
  (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-
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:
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:
2.996797 0.4130840.361457LnGDPLnFDI LnFDI
The Economic Growth Effect of Logistics Industry FDI Analysis
Copyright © 2010 SciRes. iB
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
, 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
Table 6. 1997-2007 the growth rate of China’s economy and the related factors of logistics industry.
growth rate
(10 million
The scale of fixed assets in-
vestment in logistics industry
(10 million yuan)
The actually used foreign
investment in transport
(10 thousand dollars)
The actually used foreign
investment in transport
(10 thousand dollars)
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
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
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
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
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[2] Parantap Basu, “A New Methodology For Studying The
Equity Premium,” Royal Economic Society Annual Con-
ference, Royal Economic Society, Vol. 72, 2004.
[3] X. H. Wang, “The Reviews on Economic Effects of Ser-
vices FDI,” The Journal of Shanghai University Business
School, June 2009. (In Chinese).
[4] X. J. Jiang, “The Deas, Objectives and Institutional Poli-
cies of China’s Services Development during 11th Five-
Year,” Management World, January 2005. (In Chinese).
[5] “National Bureau of Statistics. China Statistical Year-
book,” China Statistics Press, 1998-2008. (In Chinese).