The Impact of Two-Way FDI on the urban-rural Income Gap Based on Broad Least-Squares Analysis

Abstract

With the continuous promotion of China's opening up to the outside world, the gap between the urban and rural residents in China has been greatly affected. To study the influence mechanism of two-way FDI on the income gap between the urban and rural residents and to study the influence mechanism of two-way FDI on the income gap between the urban and rural residents, this paper selects panel data on the income gap between the urban and rural residents in 31 provinces of China from 2009-2018 from the International Bureau of Statistics, the People's Bank of China and the Ministry of Commerce, construct a generalized least squares model, uses STATA software, and conducts an empirical study. The research results show that the development of two-way FDI has a significant effect on reducing the income gap between the urban and rural residents. Based on the above findings, this paper puts forward the following suggestions. (1) Promote stable domestic economic growth to lay the foundation for narrowing the gap between urban and rural residents. (2) Develop high-quality foreign trade and promote labor mobility outside the secondary and tertiary industries. (3) Improve China's financial market and enhance financial efficiency. (4) Promote technological innovation and upgrade industrial structure.