Abstract
The purpose of this study is to clarify the mechanism of capital formation and the effect of FDI (Foreign Direct Investment) on Chinese economy. The domestic investment and the foreign companies' choice of location are essential to advance of capital formation. I analyzed mainly based on SUR (seemingly unrelated regression) model using the time series data from 1983 to 2004. In questionnaire, I ask about the several factors for determinants of FDI on Japanese companies.
As a result, main conclusions are as follows : (1) Most importantly, the economic growth was input driven growth(capital and labor) in China. (2) In Chinese development, firstly FDI is increased and later domestic investment is increased， and then the capital formation is advanced. (3) The GDP and low wage is important to determinant the FDI. Accordingly, the Chinese economic growth is achieved the mechanism of capital formation.
