Essays on economic development and international economics.

Abstract

The third essay, "Infrastructure as a Determinant of Foreign Direct Investment Inflows, " attempts to investigate the role of infrastructure on foreign direct investment inflows. A comprehensive physical and governance infrastructure index is constructed with principal component analysis. The cross section study suggests that both physical and governance infrastructures are positively related with FDI. The random effects panel model indicates that Governance infrastructure has positive and significant impact on FDI, while physical infrastructure has mixed results. Governance infrastructure is an important determinant of FDI inflows, and it is necessary to improve the quality of governance infrastructure in order to attract foreign investment.

I once traveled to many places in northeast China with the curiosity and eagerness of a college student. A few years later, I was fortunate enough to have the opportunity to drive through about fifteen states in the U.S. It is astonishing whenever I compare the different scenes in these two countries, and I believe any person who came from the rest of the world would be amazed by the high living standards in urban as well as rural areas, by the convenient transportation and communication, and even by the spacious land itself. Some people in the U.S. may never realize that the comfort and privilege they took for granted are the dreams and lifelong goals of people on the other parts of the same planet. This is the initiation of my passion to write issues associated with economic development and international economics. The main purpose of this dissertation is to provide more understanding about certain factors that may play important roles in economic growth and development.

The second essay is entitled "Regional Economic Integration in East Asia." This chapter reviews the theory and the history of regional economic integration, and investigates the problems and prospects in the integration process in East Asia. Based on theory, there is no real economic integration in East Asia so far, but we believe that there are tremendous potentials and bright prospects for regional economic integration. East Asian countries would gain from the future regional cooperation and integration, and China's active involvement would not only improve regional economic prosperity, but also increase political stability and balance the world power.

The first essay, "Financial Systems and Economic Development, " investigates the relationships between financial systems and the levels of economic development. The econometric model measures the cross sectional heteroskedasticity and time wise autoregression. This chapter finds that financial systems are related to economic development, and financial institutions and markets perform differently at different income levels. The higher the income, the bigger the positive impacts of financial markets, and the higher the significance levels; while financial institutions have stronger impact in upper and lower-middle income countries. International trade and education are positively correlated with growth rate, but government consumption and inflation have negative impacts on long run economic growth.