The Policy Revelation of FDI Screening and Host Country Welfare: Based on Principal-agent Theory

Inflow of FDI brings some effect on economic growth and welfare for host country. Through analyzing on the effects of FDI,we can divide the FDI into two kinds which are“quantitative-type”FDI and“qualitative -type”FDI. Host country can entrust multi-national companies with introducing different type of FDI for its economic growth. According to Principal-agent Theory,we obtained：(1) excessive preference for“quantitative-type”FDI of host country may deteriorate its welfare level,while“qualitative -type”FDI may enhance it;(2) host country should make different policy on different type of FDI,according to the different relationship of marginal costs of the two types of FDI.