Research Of The Impact Of Chinese FDI On Central Asia Countries' Economic Development

In 2013,Chinese President Xi Jinping at the University of Kazakhstan,unveiled an important vision of building a "Silk Road Economic Zone" together with Central Asian countries.A vision which aims to form new pattern of comprehensive opening that brings back a significant link to the world.China has recognized the vast mutual importance of its neighbors' relative to its own nation growth,providing Central Asia with an important role to play in the country's geopolitical strategy.The opportune benefit goes beyond the Chinese borders.This provides the Central Asian economies with the dynamics needed to boost their internal development pace well beyond what currently exist.This would require the region to better equip itself to ensure more effective allocation of an expected increase in investment intake,and increase positive spill-ovens to economic grorowth.For this reason,there exists great significance to this study of the impact of China's investment on the growth of the five emerging Central Asian countries.Regarding preexisting literature,this paper first describes the varied impacts of FDI on host country,followed by the limited documented experiences in the five central Asian countries.Studies suggest the impact of foreign in partly a condition of the investors,intent and the internal system structure.Justifying the various avenues by which FDI can impact the growth of an economy,this paper also investigates both the direct and indirect transmission mechanisms;leading to key factors that warrants the focus of policy-makers.Due to geographical complementarities,resource and cultural advantages,China-Central Asia relationship poses significant investment advantages.As these advantages continue to reveal themselves,the more mutually beneficial the investment relationship becomes.Moreover,based on a 2012 comparative view of global FDI relative to China's FDI into the region,Chinese investment indicate a more diverse pattern from which these economies can gamer better economic spill-overs,And,from an empirical perspective,a TSLS model was used to reveal the direct and indirect(spill-overs)impact of China's investment on the economic growth of these 5 countries.This paper postulates a number of key points.(1)As firms face an expanding domestic consumer market,Chinese investment is expected to accelerate,resulting from the labor-intensive production and low wages.Educating this sizable and cheap labour-force may further accelerate the inflows of FDI,multiplying the net positives.(2)Human development levels promises the largest positive impact to the economic growth rate,thereby demanding favourable attention by the economic leaders when developing economic policy that affects social factors,i.e.health and education.Further expansion of these economies will ignite the influx of additional FDI;increasing the indirect benefits to the local economy.(3)Chinese FDI,though with a lessesr direct impact,offers significant positives to the economies of these five Central Asian counties,by-way of government's involvement,i.e.,Consumption spending.(4)With adverse relationships with local investments and human resource building,the study also highlights internal concerns for improving the FDI intake from the general investor.Improve finance allocation is needed,to better target economic sector most in need of developmentThis study concludes with a series of policy suggestions,including:the relationship between.China and the Central Asian economies have presented itself as more complementary than competitive and should be seen as a unique perspective to improve nation-building extemalities.It is an opportune starting point for improving global FDI impacts,which will strengthen the knowledge and skills of local workers,establish research centers,and increase the local procurement of strengthens from both upstream and downstream enterprises.The establishment of local cooperation union,which ensures the social impact is considered in all investment projects and acts as a medium will also be a proactive and positive step.