Introduction to the Economic Impacts Section.
• FDI brings new technologies, new management techniques
• It increasingly exposes the Chinese economy to international trade
• Since the 1980s, the enormous contribution of FDI to China‘s rapid economic development has been widely recognised.
• The most obvious contributions include relieving capital supply bottlenecks, promoting economic growth and creating employment opportunities
• FDI has also contributed significantly to government revenue , foreign trade, technological progress, and enterprise management in China
• By the end of 1996, China had attracted over 280 000 foreign investment enterprises, with a total accumulated FDI (utilised) of US$176.59 billion
• In the 8th five year plan (1991-1995), FDI accounted for about 11.8% of total fixed assets in China, which further increased to 13% in 1996.
Resource Transfer Effects
• FDI can make a positive contribution to a host economy by supplying capital, technology and management resources that would otherwise not be available and thus boost the economic growth rate
Capital
• MNEs, by virtue if their size and financial strength, have access to financial resources not available to developing-country firms
• For example in China, a sufficient amount of capital has been necessary to build-up China’s economy and FDI has made a substantial contribution to this.
• The share of FDI during 1993-1999 in Chinese domestic fixed assets investment has been around 10 per cent.
• Overall China ...