Analysis of the Revelation of Taiwan-Funded and the Development Ability of Innovation-Driven of Fujian

Abstract

To clarify the relationship between the progress of productivity of Fujian and Taiwan investment, based on the relevant economic data from 1993 to 2011, the paper studied the relationship between the growth of Total Factor Productivity (TFP) in Fujian and the investment from Taiwan businessmen with the help of VAR model, impulse response and variance decomposition. Empirical results show that investment from Taiwan businessmen is, to some extent, stimulating the TFP of Fujian, but not the primary reason for its changing, and what has an important effect on TFP of Fujian is the human capital accumulation, research and development investments and provincial investment in Fujian province. Therefore, it should rely on the development of education, and increase R&D investment and inner-investment to promote the technological progress and leapfrog development in Fujian Province.