Empirical analysis on the effects and mechanisms of FDI on development of China's service industry

Abstract

The paper tests the effects of inflow FDI on the development of service industry and explores the mechanisms that FDI impacts economic growth of service industry, especially the role of spillover effect of industrial sector on service industry in the impact mechanisms, using the actual data from 1983 to 2007. The regression results show that FDI has no significant impact on economic development of service industry, but it exerts the indirect influence on economic growth of service industry through industrial spillover effect and impacting on labor input.