China Fdi

Foreign direct investment (FDI) was a key factor in the rapid economic growth and structural transformation in East Asian countries. FDI makes significant contributions to economic growth. FDI occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country (Hill, 2002, p182). There are four types of FDI that are outsourcing, trade-barrier-circumventing, market- and technology-accessing, and round-tripping.The FDI inflows and outflows also made the economic growth in the Asian during the last two decades. There are three parts: shift in comparative advantages, shift of Japanese FDI from North America to Asia following yen’s appreciation against Asian currencies since 1993, and shift in FDI to China.
Fry, Jomo, Mardon, and Urata's findings (cited in Hahm & Heo 2008, p392) East Asian newly industrialising countries (ANICs) have changed their attitude toward FDI over time. For instance, Hong Kong, Singapore, and Malaysia adopted FDI-led industrialization policies for economic growth. To this end, these nations upgraded their industrial structures and comparative advantages to encourage foreign transnational corporations (TNCs) to invest, particularly in high value-added industries. In contrast, some Asian countries were not friendly until mid-1980s, such as Indonesia, South Korea, Taiwan, and Thailand (Hahm & Heo 2008, p392). "Since then, they aggressively attracted foreign capital (direct and portfolio) into their countries to continue to develop their economies. To this end, these nations have implemented vigorous reforms and improved their business climates, as well as policies" (Hahm &Heo 2008, p392).   There are some benefits of FDI. Borensztein, De Gregorio, and Lee findings (cited in Hahm &Heo 2008, p393) first FDI provides valuable capital for investment, which can compensate domestic savings to increase financial resources for economic expansion. Given that TNCs tend to invest in long-term projects, FDI through TNCs...