This paper argues that one of the major reasons for China’s incredible growth since its opening in 1978, is due to the substantial influx of foreign direct investment (FDI). The gradual opening up of China to FDI, coupled with a large array of benefiting economic factors such as preferential policies, low labor costs, access to neighboring markets with similar culture/language etc., has resulted in unimagined investment and resulting growth. The paper shows that in this process FDI, has positively improved and/or contributed to total investment, technology transfer, employment, foreign exchange reserves, management know-how, competition, new industries and tax revenue.
The paper includes a chart.
From the Paper
“In all these cases, the liberalization process was carefully developed by only allowing access to certain sectors and geographical areas. Today there are still limitations of foreign investment in which the Government deems such sectors as “strategically” important. Such sectors or projects include airport development, nuclear power plants, oil and gas, subways, communications, printing etc. In many cases foreign investment is restricted to an equity share that is less than 50% (Tseng and Zebregs, 2002).”
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This paper explains that, with the advent of its reformist policies in the late 1970s, China opened what is potentially one of the world’s large markets to foreign direct investment (FDI). The author points out that, initially, the government tried to draw that investment into areas that were familiar to emigres resulting in a spectacular influx of FDI. The paper reports that, in subsequent years, the government has attempted to redirect FDI to other areas, with much less success. The author points out that FDI is allocated through the decentralized, largely market-oriented mechanism, which supports the view that the Chinese central government has only a limited capacity to compel private groups and local governments to adhere to policies it believes are in the national interest The paper concludes that China has received a huge amount of FDI, which will have profound impacts on that country in the coming decades.
From the Paper
“Indeed, the change was sufficiently sudden that in several instances, the ideological rationale for the change was not formulated until after markets were opened to foreign investment. The rationale for the new policy was reflected in several areas. In terms of economic development, the Chinese conceded that despite major gains, their economic condition was not improving at a rate comparable to that of other comparably situated countries. The new policies were advanced as allowing China to secure needed new sources of capital, advanced technology, advanced management skills.”
The liberalization of Foreign Direct Investment (FDI) regimes by different countries has been geared to attracting more FDI and to achieve the benefits that FDI brings. Such liberalization at the present time is fostering a boom in the increasing globalization of business.
From the Paper
The liberalization of Foreign Direct Investment (FDI) regimes by different countries has been geared to attracting more FDI and to achieve the benefits that FDI brings. Such liberalization at the present time is fostering a boom in the increasing globalization of business. Such a boom can produce considerable benefits for economic growth and development, but it can also lead to the domination of certain markets by a few major corporations. Transnational corporations thus often have greater competitive strength so that FDI might increase their market concentration and raise the scope for restrictive or anti-competitive practices by firms (1997 World investment report, 1998, 28). Many countries find that attracting FDI serves their needs and helps develop their economic structure, and an analysis of the …”
This paper describes the impact of Foreign Direct Investment (FDI) inflows on the development of the economy of emerging markets. The focus will be on the performance of Chinese locally owned firms.
Some of the topics covered in this paper include theories of the firm, globalization and economic development theories. This paper examines many aspects of China’s economy, including economic and market reform policies, labor standards, capital market integration, foreign capital participation, productivity, risks and their correlated effects. It also looks at the role they play in shaping the level of economic development and market acceptance among investors.
Statement of the Problem
Battle for Market Share
Role of FDI in China’s Rapid Transformation
Post-1978 FDI in China
Economic Theories and OLI Paradigm
Benefits of FDI to China’s Economy
Sources and Purposes of China’s FDI
Case for Globalization
Arguments Against FDI in Emerging Economies
Future of China
The Resource-Based View of the Firm
The Characteristics of the Firm in Emerging Economies
From the Paper
“Over the past several years, China has emerged as one of the largest and fastest growing economies in the world and has become a major destination for foreign direct investment (FDI) (Bilston, 2004). Its population of 1.3 billion represents a huge market with endless potential and entry to the World Trade Organization (WTO) has guaranteed a place in the global financial world. As a result, the Chinese economy is undergoing a major transformation. By addressing many of the historical challenges of entry with deregulation, privatization and economic liberalization, China is turning challenges into opportunities for foreign investment.
As leaders see the value of globalization, China has been actively seeking to attract foreign direct investment (FDI) and technology to promote its modernization efforts and accelerate its export trade capabilities since it opened it doors to foreign countries in 1978 (Xiamen, 2000). The total amount of incoming FDI increased from almost zero in that year to a high of about $110 billion in 1993 and $320 billion in 1999. As a result, China has become the world’s third largest recipient of FDI, and the largest recipient among emerging countries.”
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This research considers the economic and financial environment in Tunisia at the end of the twentieth century and whether the country represents an attractive investment opportunity for companies considering expansion into international markets. As an increasing number of companies throughout the world are marketing on an international basis, this paper looks specifically at taking business into Tunisia. The paper explores the issue in terms of internal structure, the role of the government, foreign policy, and the local political situation.
From the Paper
“Better communications mean that companies and countries no longer must operate facilities in all locations where business is conducted (although there may be other advantages to doing so). Telephones, FAXes and computers mean that companies and employers around the world have access to information and employees in far-off locations. This has long-term ramifications for multinational and global companies.”