Research On The Terms Of Trade Under The Integration Of Trade And Investment

There is an important phenomenon in world economy from 1950' , that is, foreign direct investment is developing along with international trade, and both of them present the two main motivation of world economy. This phenomenon challenges traditional direct investment theory and trade theory, which developed respectively and seldom intersected before , and makes the two kinds of theory increasing mixed .While the relationship between international investment and international trade is getting more important in today' s world, related research can not satisfy our need so far. This paper studied the impact of inward FDI on terms of trade in developing countries, a controversial issue up to now. By doing so, this paper tried to find some deep relations between international investment and international trade. Meanwhile, we tried to find the right way of developing countries to deal with their inward FDI and international trade.As the biggest developing country in the world, China has the noticeable inward FDI and international trade these years. FDI inwards in a large scale, and international trade develops rapidly at the same time, how should we explain such a thing? What is the relationship between the inward FDI and international trade of China? And how does the inward FDI affect its international trade in China? This paper discussed all of these questions when we study the impact of inward FDI on terms of trade in developing countries. Through such a discussion, we can know better that how China should arrange her inward FDI and international trade more appropriately.