FDI, Institutional Change, Employment and Services Growth in Megalopolises

Abstract

This study was set out to identify the linkages between FDI, institutional change, employment and services growth in megalopolises in China. We choose the four super cities in China, Beijing, Shanghai, Guangzhou and Shenzhen, take government interference and openness as the proxy variable of institutional change, based on Douglas production function and using data from Year 2006 to 2017, we investigated the relations between FDI, institutional change, employment, and services growth with fixed effect panel data model. Findings show that FDI presented a significant positive impact on the service economic growth of the four megalopolises, while the number of employees in the service industry has a negative effect on the growth of the service industry, which is contrary to the common sense; With respect to institutional change, openness presented a strong positive effect and effect of government intervention is not significant; the city's fixed investment and R & D investment of service sectors also presented an unclear effect.