Foreign Direct Investment In China's Process Of Marketization

The 30-year reformation in China is also called "Marketization", during which China gain great achievement. At the meantime, as one of the significant accomplishments of reformation, the importance of foreign direct investment is increasing during last three decades. With the rising FDI, more and more researchers focus their interests on FDI, most of which are about FDI and economic development, FDI and technology improvement in China. Yet, they neglect a crucial field--that is, FDI's affects on marketization in China. FDI is regarded as one of important impetuses of marketization, but there are just few studies about this topic, all of which merely provide cursory description and lack of systemic and quantitative analysis.At first, this paper analyzes theoretically the FDI's affects on marketization under the framework of institutional economics and discusses the concrete mechanism and approaches. I analyze the mechanism of FDI's affects on marketization from five aspects, like the relation of government and market. Based on theoretical analysis, this paper establishes a Simultaneous Equations- Panel Data Model to make an empirical analysis for FDI's affects on marketization. Otherwise, to test concrete approaches of FDI's affects on marketization, I make a further test about FDI's affects on five aspects of marketization and compare with private enterprises' affects on marketization.Through theoretical and empirical analysis, this paper gets following conclusions: FDI has noticeable and positive affects on China's marketization. Moreover, FDI's affects on four aspects of marketization are also positive except private enterprise. However, the main impetus of marketization is not FDI but private enterprise.Based on former analysis, this paper gives some suggestions to government. China government should make some change for policy of FDI and abolish special preferential policies while it continues to encourage foreign enterprise to invest in China. What's more, government should improve the institutional environment for private enterprises and to facilitate their development, and in the end promote the process of marketization in China.