| Science and technology have advanced considerably since the end of World War Two, impacting widely and significantly on all fields of our life. The international economic situations with the advance of science and technology have also changed a lot and the Foreign Direct Investment (FDI) became an active and crucial factor in the world economic development. The international trade, a means without which a country was unable to play its part in the international competition, had been referred as "the engine of the global economy" in the academic circle in the past several decades because of its dominance of the world market. But the FDI, rather than the international trade, was named as such an "engine" when transnational companies from many countries played the games with their competitors in the global market in 1960s. The expansion of transnational companies in FDI influenced very much the layout of the international division of labor: the designer of international division of labor became the multinationals rather than the sovereign country as before. The internal and external division of labor in transnational companies is the main bodies of international division of labor.Since the end of 1970s, China's economy has transformed planned economy into a market one. China became more active in FDI by carrying out the basic policy of opening up to the outside world. First of all, the achievements in introducing FDI into China attracted the worldwide attention. And FDI was a major impetus in promoting the formation of capitals, optimization of the industrial structure, technology advancement, foreign trade, balance of payment and increase of employment opportunities. With the improvement of investment environment and more business opportunities incubated in Chinese stable and rapid economic development, China became the second largest host country in attracting FDI after the US. Secondly, compared with the influx of foreign capital, China's FDI enjoyed a very rapid development, though its scale is rather limited.The dissertation deals with the interaction between FDI and economic development from the perspectives of the world, the investment country and the host country by using the western theories of investment for reference.The dissertation with 6 chapters as a whole can be decomposed of 4 parts.The first part, i.e. the first chapter, reviews the history of FDI and analyses the primary characteristics of the contemporary FDI, paving fundamental and technical ways for the analyses in following chapters.The second part, i.e. the second chapter, refers to the six most influential theories of FDI. In a very long time after the emergence of FDI, some scholars in the West tried to explain FDI with the traditional theory of international trade and international indirect investment. Since the early 1960s when American professor S. H. Hymer advanced his Monopolistic Advantages Theory, many scholars in the West have made plenty of researches for FDI and multiple doctrines in FDI have emerged. The mainstream theories on FDI have been developing along two lines: one is based on the industrial organization theory, which is typical of S. H. Hymer with his Monopolistic Advantages Theory and P. J. Buckley and M. Casson with the Internalization Theory; the other is based on international trade theory, which is typical of Product Life Cycle Theory (R.Vernon), Marginal Industry Expansion Theory (K. Kojima), and Investment and Trade Substitution Theory (R.A. Mundell). The two lines began to converge in the late 1970s when J.H. Dunning developed The Eclectic Theory of International Production.The third part, composed of the third, fourth and fifth chapter, analyses the influences of FDI on economic development by using the FDI theories for reference and combining the abstract method with empirical studies. The available theories of FDI in literatures are mainly derived by western scholars from the empirical studies on transnational companies, but few is concerned with the influences of FDI on macroeconomic d...
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