Does Foreign Direct Investment Affect Economic Growth in Hainan Province--Equilibrium Analysis Based on Time Series

Abstract

In 1988, the Communist Party of China allowed Hainan to build a province and establish a Special Economic Zone. In the past 30 years, Hainan Province has witnessed the economic development rapidly and enhanced the financial system. Therefore, in the framework of establishing Hainan Free Trade Area, it is particularly important to consider whether foreign direct investment has a positive effect on the economic growth of Hainan Province. This article researches the relationship between FDI and economic increase in Hainan from 1988 to 2018.It adopts the ADF unit root proof, the granger causality proof and the cointegration proof to conduct empirical research, selects the spillover effect of foreign direct investment and Cobb Douglas production function as theoretical models and reaches the conclusion that FDI has positive accelerating effect in the short-term and longterm accumulation. The article will put forward policy advice for accelerating the economic growth of Hainan Province, including increasing foreign direct investment, introducing and cultivating high-tech talents and increasing openness.