The Relationship Between Investment and Economic Growth

Abstract

In this paper, we use the datum from the third quarter of 2010 to the first quarter of 2013 to study the interactive relationship between the investment in fixed assets of different industries in China and the gross domestic product(GDP), using methods including time-difference correlation analysis, principal component analysis, and multiple liner regression. Firstly, we use time-difference correlation analysis to obtain the results that on the premise of economic growth, the scale of investment in fixed assets should keep the pace with the scale of economic development and the current investment in fixed assets has a promoting effect on the development of future economy. Secondly, using the multifactor pricing model which has grown up in the financial markets can we obtain the multifactor model of investment in fixed assets and GDP. Finally, adding on some issues to make effective conclusions.