The empirical analysis on the relationship between foreign direct investment and China´s service industry growth efficiency

In recent years, foreign direct investment focus from manufacturing to service industry. China´s total service sector has also been rapid growth, however, its output efficiency is still at a low level. This paper has tested the Cointegration and Granger causality between China´s FDI and services output efficiency. And the result shows that there is no clear causal relationship between both of them. The paper also analyzes the reasons why both of them have no Granger causal relationship and gives some suggestions on how to utilize FDI efficiently.