Economic Growth And FDI In China

Cai, Francis; Cheng, Hongfei; Xu, Lianzan; Leung, Cho Kin

doi:10.19030/iber.v3i5.3687

Cited by 4 publications

(8 citation statements)

References 11 publications

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“…According to Cai et al (2011), China became one of the favourite destinations for investors after reforming and opening its economy to international investors [16]. At the initial stage, cheap labour costs were the main incentive for foreign companies to invest, but large production, a potential market, and favourable policies have also played an essential role in the latter part.…”

Section: Literature Reviewmentioning

confidence: 99%

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Causal Interaction between Foreign Direct Investment Inflows and China’s Economic Growth

Hossain

2023

Sustainability

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This study examines the causal relationship between foreign direct investment (FDI) and economic growth in China over a 40-year period, from 1981 to 2020. Using a vector autoregressive (VAR) model, the study investigates the direction of causality between FDI and economic growth and finds that economic growth drives FDI inflows in China, rather than the other way around. The results suggest that policymakers should prioritize growth policies that foster sustainable economic expansion, rather than focusing solely on attracting FDI. The study contributes to the literature on the relationship between FDI and economic growth and highlights the importance of understanding the direction of causality between these two variables. Overall, these findings have important implications for policymakers seeking to promote economic growth and attract FDI to China.

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Section: Literature Reviewmentioning

confidence: 99%

“…Therefore, a general assumption is that FDI is a blessing for Chinese economic growth. For instance, Cai et al (2011) and Tiwari & Mutascu (2011) believed that FDI inflows played a significant role in the growth of the Chinese economy [7,8]. Moreover, to attract FDI Chinese government is also introducing different promotional activities.…”

Section: Introductionmentioning

confidence: 99%

Causal Interaction between Foreign Direct Investment Inflows and China’s Economic Growth

Hossain

2023

Sustainability

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“…A number of studies investigate the major contributors of economic growth in East Asian economic transition countries, and often FDI inflows and trade liberalization are suggested as the main determinants [22][23][24][25][26][27]. Nevertheless, the relationship between FDI and trade remains one of the hottest debates as was argued in Section 2.1.…”

Section: Trends Of Trade and Fdimentioning

confidence: 99%

FDI and Its Impact on Trade in the East Asian Transition Economies

Kang¹,

Lee²

2022

Global Trade in the Emerging Business Environment

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As globalization and trade liberalization have increased integration of the world economy through financial and trade flows, the role of FDI and trade on economic growth is becoming more influential. This paper investigates the impact of FDI on trade of the East Asian economic transition countries, namely the China, Cambodia, Lao PDR, and Vietnam, employing FDI flow and FDI stock data separately. The data from these four countries during the period 1990–2019 have been collected, and OLS and panel within fixed effect estimators are utilized. The main findings show that, first, when estimated using FDI flow as independent variable, there exists complementary effect between FDI and trade, and the coefficients are significant except for Cambodia. Second, when estimated using FDI stock as independent variable, the impact of FDI decreases and even substitutability effect is found in China at significant level. Third, in both cases, the coefficient of FDI is shown positive and significant in Vietnam. In addition, the paper finds the effects of human capital, GDP, and WTO accession on trade are positive, while the effects of exchange rate, financial development, and tariff rate vary among the East Asian economic transition countries.

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“…The researchers also reviewed the returns of this investment in the country and found that foreign direct investment in China opened new doors for job opportunities and strongly supported the export sector. The study by Cai et al (2004) has compared the foreign direct investment in China with selected developing and developed countries and found that China has great economic strength compared to other countries as it has become a destination for foreign direct investment and in conclusion in light of the massive industrial revolution that China is experiencing recently. The researchers believe that foreign direct investment is an important factor for global openness to the economies of other countries and the macroeconomy, and considering that foreign trade is the engine of the economy of any country, in the case of China, foreign direct investment is the engine of the post-industrial economic stage in the country.…”

Section: Literature Reviewmentioning

confidence: 99%

FDI Environment in China: A Critical Analysis

Fernández¹,

Alnuaimi²,

Joseph³

2020

IJFR

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Investors prefer to invest in assets and places that offer attractive returns and are relatively less risky. China is one of the countries with the highest economic growth and is trying to attract investors from all corners of the world to invest and participate in the growth of China. The main objectives of this study are to evaluate the position of China as a destination for FDI, the factors that attract FDI into China, and the factors that hinder the flow of FDI into China. It also proposes to examine whether the attractiveness of China is increasing or is it on the decline and the rationale behind it. This study is based on secondary data, covers a period of five years, and analysis various determinants of FDI. The study reveals that China has the potential, political stability, and an organized financial system, but its market has started to shrink as the population growth is declining, the labor cost is increasing, labor market efficiency is decreasing, economic growth and infrastructure developments are decelerating, and corporate and individual tax rates are high.

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Economic Growth And FDI In China

Abstract: This paper studies the importance of foreign direct investment (FDI)

Cited by 4 publications

References 11 publications

Causal Interaction between Foreign Direct Investment Inflows and China’s Economic Growth

Causal Interaction between Foreign Direct Investment Inflows and China’s Economic Growth

FDI and Its Impact on Trade in the East Asian Transition Economies

FDI Environment in China: A Critical Analysis

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