The Comparative Analysis Of China And India's Use Of FDI And The Implications For China

As the main ways of international capital flows, foreign direct investment (FDI) plays a great part in the economic development of the developing countries. FDI is absolutely an effective way of technology transferring for the developing countries. Making the positive policies to absorb FDI means a lot for the development of our economic and social development.China and India are two neighboring countries with the two largest populations in the world. There are a lot of similar points in the economy and society in the two countries, while many difference. Comparing these differences between the two countries contribute a lot to the better use of FDI for China.There are 4 chapters in this dissertation. Chapter 1 briefly introduces the relative theories about foreign direct investment, including the forms of using FDI, the initiatives of FDI analysis and the economic impacts that FDI plays on host countries. And then we will introduce the relative papers on the comparison of the use of FDI in China and India.Chapter 2 compares the use of FDI in China and India without the quantitative methods. The comparisons include the amount that two countries absorb, the main countries or areas that FDI comes from, the main industries that FDI inflows into and on basis of these we will compare the performance of the inward FDI as well as the potential indices in China and India. The conclusion is that India falls behind China not only in the inward FDI amount but also in the performance and potential indices. And then we will discuss the reasons that India falls behind China.The model in Chapter 3 is based on the'OLI'theory and the model that was set up by Wenhui Wei (2005). The results of this model show that the larger domestic market size and more friendly FDI strategies of China make China much more attractive than India. India has more advantage in the workers'wages. With the increase of wages of manufacturing industries in China, there would be a lot of impacts on the low-cost seeking FDI in China, while the main inward FDI flows to the services in India, the impacts would be much smaller. China has gradually lost the low-cost advantage and she should change the patterns of using FDI.Chapter 4 is the last part of this dissertation. It raises the conclusions comprehensively and some suggestions about policy making and the further study.