The Practice Of Foreign Direct Investment In Developing Countries And The Implications For China

Since the 1980s, developing countries have gradually integrated into the world economic globalization, and foreign direct investment (FDI) of the developing countries are actively carried out as well as absorbed. The amount of FDI made by developing countries has been increased to 11% in 2000, from 7% in 1990, during the finance crises, it raised to 15% contradictorily. Developing countries are becoming an important source of FDI. As the largest developing country, China's economy is growing rapidly in recent years, and turns out to be the second-largest in the world. Under this international situation, relying on foreign capital to participate in the global division only and accept the global strategic layout make by developed countries and multinational companies passively will never provide an advantageous position in the economic globalization and global division. It is an essential option for China to raise its economy by expanding the foreign direct investment scale, and implementing the strategy combing"bringing in"with"getting out". But as a newly industrialized economy, China is not only inexperienced in outward FDI, but also haven't formed coordination and promoting system, lack of risk prevention capacity, new challenges constantly emerging. Therefore, the study of the practice of outward FDI in developing countries and the enlightenment for china has important theoretical and practical significance.The thesis can be divided to two sections: the first section analysis the agent and effect of FDI in developing countries based on domestic and international research review. Then, it concludes the FDI evolving routes in developing countries through staged research of FDI in developing countries. It also compares different FDI policies in Korea, Singapore, Brazil, Russia etc. The second section analysis the investment situation and problem of foreign direct investment in China, comes up with policy recommendation of enhancing the foreign direct investment in Chinese enterprises during the post-finance crisis time.Major conclusions of the thesis can be summed up like: 1. the intention for foreign direct investment in developing counties usually includes seeking for foreign market, factors of production (including labor, natural resources, capital and technology management), diverting risks, acquiring original producing country effect, and nationality bond. 2. Foreign direct investment encourages economic growth, optimize international trading conditions and improves technology progressions in developing countries, and provides a two sides effect to international income and expenses as well as employment. 3. Foreign direct investment applies to the evolving routes of Hechsher-Ohlin industry FDIâ†'indifferent Smithian industry FDIâ†'different Smithian industry FDIâ†'Schumpeterian industry FDI. In each evolving procession, motivation differs as shifting import substitution to export oriented strategy, adjusting and updating industry structure, seeking for technology management. 4. The policy measures in Korea, Singapore, Brazil, and Russia in increasing the FDI of developing countries can be significant inspiration for China as we are under the similar situation.5. Judging from the inside, China does have advantages in foreign direct investment such as high strength firms, abundant foreign exchange storage, up-valuation of RMB, and encouragement form the government as well as disadvantages of low firm management level and imperfections in government policy. From the outside, the FDI contraction in major developed countries during the post-finance crisis time, the decreasing cost of FDI, economic stimulating projects in each country, and the rise of global trade protectionism create opportunities for China's FDI. However, the unclear economic conditions and infirm finance system are threats.