| With the introduction of foreign direct investment in China year on year, the impact of FDI on domestic investment in China has also expanded each year. Yaohan is opened in 1992,and it marked the formal entry of foreign retailers into China, which began to compete with local retailers in China. So far, foreign investment has gone through nearly 20 year in China. With the rapid development of foreign retailers, the actual use of FDI has also increased steadily in the past 20 years. There are a lot of controversies on what kinds of effect the introduction of FDI in retail industry on domestic investment. In this paper, I make some qualitative analysis on the capital formation effects of FDI in retail industry, and I also use Agosin and Mayer model for reference to make some quantitative analysis on capital formation effect of FDI.There are four parts in the paper.In the first part, I mainly discuss the research background, purpose, significance and relevance theory. As to the effect of capital formation, most papers focused on the capital formation effect that foreign direct investment made on domestic investment, but as to some industry, there are just a few papers on the topic, and these papers generally remain at the theoretical level. So I choose this topic as my Master thesis topics.The second part describes development process and status of FDI in retail industry.The development of FDI in China retail industry has gone through five stages:firstly, experimental phase (1992～1995); secondly, initial phase(1995～1999); thirdly, Normatively developed phase(1999～2001);fourthly, transition period after China becoming a member of WTO(2001～2004); fifthly, fully open stage in China(2004～now).PartⅢ, I analyze the capital formation effect of foreign retail from the perspective of the qualitative and quantitative respectively. To begin with, I elaborate the performance of crowding-in effect and crowding-out effect from the qualitative perspective. The crowing-in effect showed in the following aspects: firstly, the introduction of FDI in retail industry increases the stocking and expands the export of Chinese products. Secondly, the entry of foreign retailers can play an active part in domestic economy, expand domestic demand and meet the more diversified consumer demand in China. The crowing-out effect showed in the following aspects:firstly, The entry of foreign retailers has resulted in large-scale fail or merge, so that China's retail industry is likely to fall into monopoly by foreign capital; Secondly, the lower price strategy of foreign retailer squeeze the Domestic market share in China; Thirdly, with the rapid development of foreign retailers, it will give a threat to the industry and financial security in. China. In the second place, from a quantitative point of view, I use Agosin and Mayer's model to give a conclusion that FDI don't exist neither crowing-out effect or crowing-in effect, but in a word, a neutral effect.Part IV,I analyze the reason why can come into being this conclusion, I think it is the investment mode, Investment Format, Regional distribution and the stage of introduction of FDI that lead to the conclusion. Finally, I put forward some constructive suggestions from the government level and the domestic retail level respectively. The Government should improve retail-related laws and regulations, adhere to the principle of progressive strategy to attract foreign investment, cancel foreign retail super-national treatment to create a fair competitive environment for domestic retailers. While domestic retailers should strive to improve their competitiveness, expand the scale, open up the retail market. |
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