How Does Fdi Affect Economic Growth In China

FDI AND ECONOMIC GROWTH IN CHINA (research proposalCHAPTER I : INTRODUCTION1 . circumstance of the ProblemThe last decade was characterized by the increasing importance of opposed direct investment (FDI ) in global capital flows . By the end of the 1990s more than 50 portion of ontogeny economies was repayable to FDI (World Bank , 2000 . In mainland China this tendency resulted in dramatic harvest of annually utilized FDI . While in 1983 the annual FDI in Chinese economy was only 636 trillion , in 2002 the figure increase by nearly vitamin C times to reach the milestone of 53 billion . still , during only one year , 2002 , FDI in the country increased by a bit less than 13 percent , and it was estimated that approximately 420 ,000 foreign-funded enterprises in China were responsible for a accumulative volume of FDI of 448 billion (Morrison 2003Rapid increase in FDI occurred largely due to changing understanding of the frugalal processes by policymakers in China and other developing countries . After the debt crisis of the early 1980s and enigmatical of many developing economies , suspicious attitude to FDI which prevailed in the precedent years gradually disappeared , while emerging economies began to attract FDI . The sore tendency , evidently , owed a debt to the belief that foreign investments implied a number of sparing benefits to the recipient state . Transfer of technological innovations , improvement of domestic management and employee training practices , productivity gains entrance money to parvenue markets , and direct capital financing - all these economic advantages were considered to result from FDI and stimulate the growth of national economy (Grossman and Helpman , 1991Opponents of the effected view about the direct linkage in the midst of FDI and economic growth list the following arguments . Firstly , many previous economic studies realiseing the assumption of direct positive linkage were reasonably criticized in the new research . Thus , economic growth was also found to have influence on FDI , while the early research took into consideration only one-way FDI-economic growth relationship (Kholdy , 1995 .

Secondly , one of the nearly recent theoretical developments in economic studies - `new growth scheme - discovered that the role of FDI in growth of the economy should be reevaluated . And finally , the latest approaches developed within the econometric possibleness namely causality testing and time series concepts of reintegration introduced new questions to the debate about the direct positive relationship between FDI and economic growth (Shan et al , 1997The existing abundance of lit dealing with the problem of relationship between FDI and economic growth coupled with the global economic transformations we are witnessing these days gives forgetful hope that some final conclusion will be achieved soon . The present research is intended to investigate late into the issue of FDI-growth in Chinese economy - arguably the most perspective recipient of FDI for the next decade - in consecrate to reveal which perspective provides more reliable and full argumentation2 . question ObjectivesThe purpose of the present research implies the following objectivesto reveal the arguments which support the theory of one-way causality between FDI and growth of Chinese economyto expose the...If you want to get a full essay, army it on our website: Ordercustompaper.com

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