the influence of foreign direct investment

By Robert Black,2014-10-12 22:08
8 views 0
the influence of foreign direct investment

The influence of foreign direct investment


    Foreign direct investment, the industrial structure Funds transfer


    With China's accession to the WTO,there is an increasing in the foreign owned enterprise proportion. Foreign direct investment brought positive influence the economic growth in China, but as foreign investments mainly interested in China's huge market and cheap labor, and realize the max profit is their fundamental motive, foreign direct investment to the economic growth in China has negative influence




    Foreign direct investment is one of the main forms of the modern capital internationalization, according to the international monetary fund (IMF) definition, it refers to the investors of a country used its nations capital production or business in another country, and to master a certain business investment behavior control. It can be also regard as is the residents entity of a country set up a long-term relationship with the enterprise of another country, which enjoy the interest and control investment. Foreign direct investment lead to some positive influences of the economic growth in China's, first of all, the large amount of direct investment increase the country's capital stock, and put forward the people of foreign exchange savings-double gap. By 1999 the actual inflow into our country of FDI accounts for 17% of the total amount of investment in fixed assets, if considered supporting domestic capital formation, the investment effect is more apparent; The domestic investment from our relationship with FDI in the measure analysis,we can see clearly that the increase domestic investment and FDI promotion have significant effects on the capital formation. Second, the

    foreign investment enterprise absorbs a large Numbers of labor employment in China, according to relevant statistics ofour country from 1990 to 1999 ,in these ten years, foreign investment economy added 5.65 million employees in China which eased the pressure of employment, directly or indirectly. Third, FDI can promote the comprehensive factor productivity, from some results, it can be seen that FDI did raise the our comprehensive factor productivity in a all-around way. mainly because the FDI is creative, an investment in the transfer of money, concept, research and development, technology, management, marketing, market network also can then move to the recipient.

    foreign direct investment has negative influence to the economic growth in China, and with China's accession to the WTO, large multinational companies poured into the gradual reduction of the negative effect, has become more and more obvious. First of all, the foreign enterprises find various ways to control enterprise of the equity. No longer rely on foreign Chinese investors and their cooperation to adapt to the traditional planned economy characteristics; Foreign foreign-owned business are trying to corner the market control our country industry. Second, the foreign investment enterprise often strict control of its technology, particularly the spread of new and high technology in China, with change of the technology market ,although a developing country consider to absorb more employment in our country, we should consider to choose laborer apply. China will not backward status and foreign competition In my opinion, from the positive influence on the further analysis we can seen through FDI industrial structure, we can expand foreign trade import and export commodities and optimization of the structure. But also as stated above, with China's accession to the world trade organization and gradually lifted the restrictions on foreign behavior, the FDI enterprise had plans to control our country industry, monopoly market and sealed off the new trend of advanced technology. Therefore, this problem should give enough attention.

Report this document

For any questions or suggestions please email