American Journal of Applied Sciences

Empirical Analysis: Business Cycles and Inward FDI in China

Qiyun Fang and Yao Liu

DOI : 10.3844/ajassp.2007.802.806

American Journal of Applied Sciences

Volume 4, Issue 10

Pages 802-806


It is well-known that the current speeding-up of globalization has been, on one hand, spreading macro economic effects around the world, while, on the other, fueling firms’ activities of crossing national borders. Then, are there any links between these two influences? In this paper, we chose China as our subject, to try to clarify it. A set of models for Granger Causality test and VAR Impulse Responses were constructed and some econometric estimations and empirical analysis were made by employing the latest 20-year authorized annual statistic data. And the findings clearly indicated that firms’ (foreign) activities (inward FDI) do respond pro-cyclically to business cycle developments in a long term.


© 2007 Qiyun Fang and Yao Liu. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.