Assessing the role of inward foreign direct investment in Chinese economic development, 1990-2007 : towards a synthesis of alternative views
Document Type
Journal article
Source Publication
Structural Change and Economic Dynamics
Publication Date
6-2016
Volume
37
First Page
107
Last Page
120
Publisher
Elsevier BV
Keywords
China, FDI, Economic development
Abstract
In the context of globalization, China has been widely regarded as the most successful country in the world in utilizing inward foreign direct investment (FDI) for economic development. The mainstream of the literature has produced a wide range of studies that are largely within the theoretical framework of neoclassical economics, and they tend to conclude that FDI has contributed significantly to Chinese economic development—through capital formation, export expansion, technology transfer, and the transformation of the economic structures and institutions. The objective of this paper is to assess the role of FDI in Chinese economic development with reference to the broader theoretical literature on FDI and late development, which encompasses structuralism and radical political economy along with neoclassical economics. From the perspectives of the broader literature, the analyses of the paper find that FDI in China has indeed promoted economic development in one respect (improving allocative efficiency), but has also had unfavourable effect in another respect (worsening productive efficiency), resulting in an overall impact that tends to be on the negative side. The mainstream story of China is thus judged to be partial, and the lessons to be drawn from the experience are arguably far more complex than have been hitherto perceived.
DOI
10.1016/j.strueco.2016.01.004
Print ISSN
0954349X
E-ISSN
18736017
Publisher Statement
Copyright © 2016 Elsevier B.V. All rights reserved.
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Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Lo, D., Hong, F., & Li, G. (2016). Assessing the role of inward foreign direct investment in Chinese economic development, 1990-2007: Towards a synthesis of alternative views. Structural Change and Economic Dynamics, 37, 107-120. doi: 10.1016/j.strueco.2016.01.004