The Establishment Of Risk Measurement System And Application To China's Introduction Of Foreign Direct Investment

In the new century, globalization of economy has become an irreversible trend. The most remarkable phenomenon of the world economy is that international production systems based on Multi-national corporations (MNCs)' foreign direct investment (FDI) are coming into being rapidly. The current international capital that represented by MNCs and based on FDI is penetrating, participating, controlling towards every corner of the world on an unprecedented scale. Meanwhile, Many developing and transitional economies have improved actively and observably their investment environment to attract FDI. However, Extensive practice experiences have indicated that while promoting the increase of national economy, the utilization of FDI should also be confronted with certain economic cost.From 1984 to 2004, the amount of FDI in China has increased at the average rate of 20.6% annually. It has been ranking No.l for 12 years in the field of absorption of FDI among developing countries since 1993. As what it shows, FDI has made great contribution to the development of China' economy. However, its negative effect has also revealed gradually. For example, Relying on its competitive advantages, the MNCs have eliminated and purchased substantive Chinese enterprises, monopolized and controlled domestic market, which resulted in the dependency of China' economy on FDI to a certain extent. On the purpose of analyzing risk caused by FDI more efficiently, the thesis attempts to establish a risk measure system of introducing FDI.Firstly, the thesis introduces briefly the research fruits on the relationship between FDI and host country, including basic theories of FDI from the standpoint of host country, studies on the moderate scale of utilization of FDI and so on. Secondly, the thesis reviews the developing history of FDI in China, points out that FDI also plays a negative role in China, besides bringing positive effects on China's economy, such as repression of domestic capital, aggravating technical dependency on MNCs, and deepening of industrial control. On the basis of above analysis, the thesis puts forward the necessity of establishing measurement system to supervise the risk caused by FDI. So the thesis chooses seven indices from macro-economic andneutral-economic level to constitute the system. The macro-indices include FDI dependence as a main index, with UNCTAD' S Inward FDI Performance Index and concentrative degree of home countries as the other accessorial two indices. The neutral-indices include foreign holding share and market share occupied by foreign-funded enterprises as two main indices, with brand share and technology share owned by foreign merchants inside foreign-funded enterprises as the other accessorial two indices. All these indices have existed solely in the previous studies, but the author picks them up selectively to form an organic system. Then the thesis demonstrates China's economy with this measurement system. The conclusion shows that the risk of utilization of FDI doesn't caused by quantity, but by quality. Furthermore, the thesis analyzes the trends of the development of FDI in China and their impaction on these seven indices. Finally, the thesis puts forward several suggestions so as to utilize FDI more efficiently in the next stage at government and enterprise level.