A Study On The Home Country Effects Of Foreign Direct Investment

With the increasing depth development of economic globalization, foreign direct investment (FDI) has become an inevitable choice for enterprises to participate in international division and carry out international operations. Foreign direct investment based on different motives needs to have different conditions, and also will produce different effect. Compared with developed countries, FDI of enterprises in developing countries has more prominent effect on the pursuit of learning. From the national economic level, foreign direct investment in domestic enterprises has both positive and negative effects for the development of the national economy. How to encourage and guide the orderly conduct of foreign direct investment of domestic enterprises and fully play the positive effect of the home country, is worthy of serious thought. In the critical period of "going out" strategy, the systematic in-depth study on home country effects of foreign direct investment in developing countries has important theoretical and practical significance.Referring to the theories of international investment, international finance, development economics, and other related subject knowledge, this paper attempts a system study on the home country effects of foreign direct investment. It is divided into five chapters. In chapter one, there is a summary about the background and significance of topic-selection, the research actuality and its methods and contents. Chapter two expounds a theoretic analysis on the basic features and economic substance of contemporary foreign direct investment, connotation and classification of the home country effects of foreign direct investment, and basic theories of FDI. Chapter III discusses the home countriy macro effects of foreign direct investment, including balance of payments, macroeconomic adjustment of industrial structure, foreign trade development and employment effects and so on. The fourth chapter discusses the home country micro effects of foreign direct investment, including resource allocation in multinational companies, the reflux effect of advanced technology and management experience based on learning, extending product life and competitiveness of enterprises, promoting commodity exports by passing trade barriers, and economic benefits of price transfer. In chapter V, some countermeasures of promoting the development of home country by FDI are proposed, particular, to establish and improve the insurance system of foreign investment, to broaden the areas and regions of foreign direct investment, and to cultivate the international business professionals actively, and so on.There are two possible innovations in this paper. First, the paper summarized the basic characteristic and economic substance of contemporary foreign direct investment, and the connotation of home country effects of FDI. Second, the paper discussed the macro and micro effects of FDI based on the home country perspective. However, due to various reasons, this study has some shortcomings, such as no empirical test for home country macro and micro effects of foreign direct investment, which is also the further research content and direction in the future.