Foreign Direct Investment And Economic Development In China Part A - Review of the literature Introduction There has been empirical evidence surrounding greater economic development attributed to the...

Foreign Direct Investment And Economic Development In China
Part A - Review of the literature
Introduction
There has been empirical evidence surrounding greater economic development attributed to the foreign direct investment in china. The positive effect witnesses by the quality institutions in Chinese host regions has been impacting with greater level of inflows witnessed since 90's. The fee burdens are reduced and the tax reductions for the foreign investments in China have led to adoption of the variable approach. The suitable policies with respect to foreign investment have been a significant factor too. The FDI induced improvisation for the institutional firms along with the locational advantage in China has boosted the foreign direct investment in the economy leading to greater economic development witnessed too. The industrial competitiveness has a great impact basis the ability for the country to produce and then export the goods. Foreign Direct Investment has aided to a great extent in maintaining the requisite and the significance. The effect on the industrial performance in China is attributed to lot of factors. The FDI interaction taking place with the human capital too is crucial in case of China.
The FDI inflows do impact the industrial performance. The same is being a significant factor in the growth of investment over the years in China (Cui, L., Meyer, K.E. and Hu, H.W., 2014, pp. 494; Long, C., Yang, J. and Zhang, J., 2015, pp. 35; Pradhan, J.P., 2017, pp. 115; Büthe, T. and Milner, H.V., 2014, pp. 94). The linked economic development is associated to the fact. China has been experiencing greater competitiveness associated to the industry since 1978. The open door policy at China was remarkable and it paved way to the ability of the country to export the various manufactured goods. This has impacted the foreign direct investment too for it. The industrial upgradation has been marked with enhanced economic development too. The adoption of the initiatives brought about a radical shift in the influx of multinational corporations and the foreign direct investment soaring to greater levels.
The industrial performance in China acted as a benchmark for the other nations competing with them. The role of foreign direct investment in shaping up the needed progress and economic growth for China has been significant (Cui, L., Meyer, K.E. and Hu, H.W., 2014, pp. 494; Long, C., Yang, J. and Zhang, J., 2015, pp. 35; Pradhan, J.P., 2017, pp. 115; Büthe, T. and Milner, H.V., 2014, pp. 94). The distinctive features that are attributed to the success in the growth of foreign direct investment are the industrial competitiveness index along with the industrial output taking place in china (Tang, C.F. and Tan, B.W., 2014, pp. 6). There have been various channels that have paved way to the significant growth of multinational companies in China.
Foreign Direct Investment in China is crucial even for the other host counties. The tangible along with the non-tangible assets forming part of the raised industrial performance encompass know how along with the capital, brand name, the various managerial practices (Wang, Y., Ning, L., Li, J. and Prevezer, M., 2016, pp. 817). The access to the markets in China along with the sound technology adopted for the multinational companies has been part of the significant approach in China (Cui, L., Meyer, K.E. and Hu, H.W., 2014, pp. 494; Long, C., Yang, J. and Zhang, J., 2015, pp. 35; Pradhan, J.P., 2017, pp. 115; Büthe, T. and Milner, H.V., 2014, pp. 94; Tang, C.F. and Tan, B.W., 2014, pp. 6). The new skills associated with the technology use along with the operations are crucial. The multinational companies operating in China have been promoting the industrial productivity levels.
The technology utilized has increased the production capacity of the supplier firms that are present to supply the needed goods (Chu, L.Y. and Sappington, D.E., 2015, pp. 780; Long, C., Yang, J. and Zhang, J., 2015, pp. 34; Nylander, J.P., 2014, pp. 65). The transfer of the technology to the various firms that are responsible for supplying the intermediate goods in production along with the supply to the buyers for the foreign affiliated products has brought in the capabilities. These capabilities are further associated with the forward linkage and the backward linkage.
The phenomenon associated with backward linkage taking place, wherein the multinational companies have been enhancing the needed productivity levels for the supplier firms. The same is done by provisioning greater innovation, upgrading the production capacities and assisting the local firms in order to purchase the intermediate goods and the raw materials (Cui, L., Meyer, K.E. and Hu, H.W., 2014, pp. 493; Long, C., Yang, J. and Zhang, J., 2015, pp. 36; Pradhan, J.P., 2017, pp. 115; Büthe, T. and Milner, H.V., 2014, pp. 93; Yang, J. and Zhang, J., 2015, pp. 34; Nylander, J.P., 2014, pp. 65). The manner in which the forward linkages are helping the local distributors in China, the marketing knowledge pertaining to the MNC's can be used with the higher quality standards. This certainly leads to the prices of the intermediate goods being priced at lower costs too.
The establishment for the research and the development facilities increases the expenditure for the host economies. This investment in the Research & Development creates the capacity needed to generate greater knowledge due to the characteristic present for such activities, that of the public goods . The various domestic firms who usually compete with the foreign affiliates do stand in a position to improvise and upgrade the methods associated with production methods (Chalmers, I., Bracken, M.B., Djulbegovic, B., Garattini, S., Grant, J., Gülmezoglu, A.M., Howells, D.W., Ioannidis, J.P. and Oliver, S., 2014, pp. 158; Cui, L., Meyer, K.E. and Hu, H.W., 2014, pp. 493; Long, C., Yang, J. and Zhang, J., 2015, pp. 36; Pradhan, J.P., 2017, pp. 115; Büthe, T. and Milner, H.V., 2014, pp. 93; Yang, J. and Zhang, J., 2015, pp. 34). The same is attributed to the observation of trends and the exposure to the superior technology. The greater competition that is being brought out with the entry of the multinational companies forces the various local firms to upgrade the existing technologies.
The success of China has been in attracting greater foreign direct investment. This has also drawn the needed attention all across the globe and China has been capable enough in enjoying a greater share of the foreign direct investment in the economy. The same has led to the improved economic status for the country. The economic development relies on factors that are attributed to the gross domestic product and the utilization of the resources in an apt manner (Ren, S., Yuan, B., Ma, X. and Chen, X., 2014, pp. 124; Wang, Y., Ning, L., Li, J. and Prevezer, M., 2016, pp. 817; Cui, L., Meyer, K.E. and Hu, H.W., 2014, pp. 490; Chalmers, I., Bracken, M.B., Djulbegovic, B., Garattini, S., Grant, J., Gülmezoglu, A.M., Howells, D.W., Ioannidis, J.P. and Oliver, S., 2014, pp. 458). The FDI in China has been a crucial factor that has helped the economy grow to the exceeding levels than expected by economists. The capital flow that has taken place in the economy is being...