The Effect Of Foreign Investment On Chinese Capital Formation, Technological Diffusion And Industry Upgrading

Enterprises funded by Foreign Direct Investment have been playing a very critical role in Chinese economy. Since capital formation and technological development is important to economy, this thesis tends to analyze the effect of Foreign Direct Investment on Chinese economic development in the view of capital formation of FDI, technological diffusion and industry upgrading by using modern economic tool of analysis. Base on it, some information can be got for the decision-making of use and adjustment of FDI under the terms of opening-door policy.In the beginning, this thesis analyzes the role of FDI in investment of fixed asserts, the application of the theory of "two-gap model" and the negative effect of FDI on internal investment in order to give the idea of the contribution of FDI to the Chinese capital formation. Then, the analysis goes to the effect of technological diffusion of the Chinese enterprises funded by FDI, the constrains from the multinational companies on the technological import and diffusion, and a deep investigation has been done to the industry upgrading of FDI. At the end, this thesis summarizes the development and problem of the Chinese import of FDI and some suggestion can be made to the formation of policy of capital formation and industry technology.