Foreign Direct Investment Of Chin Spill Over Effects On Domestic Enterprises

The Foreign Direct Investment is stimulated by diverse macroeconomic factors such as the GDP, GDP per capita and also by the political stability of a country. The US is the country, which receives the more FDI in the world; even tough some other countries recently have increased their FDI considerably in term of growth. The overall quality of the infrastructure in the US

4. K.C. Fung, Hitomi Iizaka, Sarah Tong. 2002. ‘Foreign Direct Investment in China: Policy, Trend and Impact’, paper prepared for an international conference on “China’s Economy

I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.

Using examples and case studies discuss and evaluate the impacts of foreign direct investment on host country economies.

China is an excellent country which has rapid changes in both social and economic after introduced the Open Door policy in 1982. With the economic reforms, it introduced many foreign companies to invest in China and has great influence on enterprises and market. The economy in China has developed at a high speed during last thirty years and growing at around 9.6 percent every year on average. China joined the World Trade Organization (WTO) in 2001 which means an extension of the reform, meanwhile, brings the new opportunities to Chinese companies’ growth. The development of both society and economy in China helped introduced foreign direct investment. At the same time, Chinese enterprises invested abroad and got access to foreign resources, new markets, human capital, technology, and knowledge. Therefore, multinational enterprise seems little by little to be a key factor in China’s economic ambitions which is also an essential role in the worldwide globalization.

From 1979-2000, China pursued a policy this promoted FDI related to export promotion, which contributed to Taiwan and Hong Kong investment, because it helped it helped protect China’s local businesses. Market driven FDI, which is primarily what the US, EU and Japan are interested in investing, was limited in China because it would potentially hurt Chinese firms due to intense competition from western firms (Naughton, 403). The “western” firms were less interested in investing in China for export purposes, but rather wanted to take advantage of the massive market for consumer products present in China (Zhang, 294). Because of this, Taiwan and Hong Kong investment contributed a larger amount to FDI in China than compared with the US, EU

Furthermore, Prime, Subrahmanyam and Lin selected the data to compare levels of FDI and FDI performance, and introduced the Porter's diamond theory to analyze the data. Firstly, Prime, Subrahmanyam and Lin (2011) found that demand conditions, factor conditions, and firm strategy, structure and rivalry can’t certainly verify the larger FDI flows to China as compared with India (pp. 312-320). As Prime, Subrahmanyam and Lin mentioned, both countries have the similar potential market capacity. In the factor conditions (infrastructure, technology and labor force), both countries have made major progress with infrastructure, but weakness remains in both places (Bai and Qian, 2010; Patel and Bhattacharya, 2010; Sweeney 2010). Compared with

In previous studies of FDI and its effect on output and economic growth, many economists’ researchers have concluded that foreign investment has a positive impact on economic development. There are several studies of FDI “as an engine for growth” in China.Zhang (2006)

There is no dout that foreign direct investment (FDI) plays a very significant role in economic growth, according to experiences of new industrial countries in Asia. Over a decade of opening for FDI, we could realize that the more FDI inflows pour into our country the more we benefit. In fact, FDI has contributed a great proportion to fulfill targets on socio-economic development plan and has been one of the most important external sources of Vietnam on the process of industrializing and modernizing the country.

Foreign Direct Investment is the direct investment in new facilities or companies to expand a business in a new country. In evaluating and analyzing East Asia, it is important to focus on cultural issues as they are major indicators of the business environment and implementation in a given local. East Asia, including China, only began opening up for foreign investment in the 1970s. Japan is considered a developing market, where the rest of Eastern Asia is an emerging market, the majority of FDI around the world is targeted to developing nations due to increased stability, consumer culture, and large markets. The risk of emerging markets is greater than in developed, thus yielding a greater return on investment when the endeavor succeeds.

The correlation between foreign direct investment (FDI) and economic growth is well documented see (Borensztein, De Gregorio, J-W. Lee 98). Even though there has been an extensive amount of research, which includes both FDI and economic growth, there still seems to be a substantial divide between the results; which are concluded within these papers. To begin in this research paper we will define foreign direct

There is a long standing belief that foreign direct investment (FDI) inflows help the countries to have the opportunity to make further improvements on their economies. In recent decade, this belief strengthened by the fact that faster growing economies tend to attract more FDIs. Even if the direction of causality between FDI and growth is not absolute yet, positive impacts of FDI such as new technology, know-how or creating employment are enough attractive for policymakers. Consequently, investigating factors that pull FDI into country became a crucial topic in the literature.

The world is becoming a global village and more companies are now operating at an international level. This essay critically analyses some of the factors which influence Foreign Direct Investment (FDI). Morrison (2006) defined FDI as the establishment of a company of a productive nature in a foreign country involving large volume of shareholding in foreign operations. The essay will investigate how important FDI is in the process of globalisation and in the activities of multinational enterprises as well as examining how international trade and FDI are interlinked. There will also be a discussion of different reasons why companies

Volume III, Issue 2, September 2007 © 2007, Journal of Asia Entrepreneurship and Sustainability No reproduction or storage, in part or in full, permitted without prior permission. Editors@asiaentrepreneurshipjournal.com

Foreign Direct Investment plays a vital role in the growth of recipient countries (de Mello, 1997). FDI inflows help recipient country with the financial resources and even employment that may not be available with them; this helps boosting the economic performance of the country. FDI increase the production output of the country and more efficient use of resources by getting in more advanced technology and funds and by observing the unemployed resources of the