Why China Can Attract More FDI:
A Response to "Competitiveness in India and China: the FDI puzzle"
In 2008, a serious financial crisis swept the globe, causing many countries' economies sunk in depression or recession. After four years, some emerging economies, such as China and India which are the members of the "BRICS" (the acronym of Brazil, Russia, India and China, which are at a similar stage of newly advanced economic development), firstly got rid of the effect of this financial crisis. Therefore, these emerging economies begin to draw more economists' attention. Prime, Subrahmanyam and Lin researched the competitiveness in India and China through the foreign direct investment (FDI). In " Competitiveness in India and China: the FDI puzzle", Prime, Subrahmanyam and Lin (2011) applied the Porter's diamond theory to illustrate, the FDI puzzle, why China can attract substantially more FDI, although China and India have many similar factors (pp. 303-333). Though I strongly agree with their research because my experience in China confirms it, I still insist that they didn't provide ample evidence to support the result of this research. After summarizing their research paper, I will supplement evidence into the result from three aspects: related and supporting industries, government, and chance.
To begin with, this research exposed a FDI puzzle between India and China through analyzing the current economic condition. Prime, Subrahmanyam and Lin (2011) stated, "Given their growth records, large markets, and reformed economic systems, both China and India appear to be equally likely candidates for foreign direct investment. Yet, China has received substantially more FDI" (p. 303).
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Globalization has caused the world to change. Our country, China has been dramatically changed by globalization. Our people have moved to cities, and our industry has exploded. We have had huge advances in technology along with education improvement. Despite the fact that China has changed so much, there are still many issues that plague it. China faces serious environmental concerns. New diseases and viruses that are not indigenous to China can cause a wide range of sickness in the new area. Despite some of the the improvements in China that are a result of globalization, the negatives that globalization has brought to China are more than the benefits.
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by a world power can be felt by practically every nation of the globe involved
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Due to the sudden collapse of the world’s economy in 2008 M&A became an unfavourable method of FDI and in just one year IFDI into UK shrank by 50%. The trend continued up to 2011, as the FDI pattern moved towards investments into third world countries and developing nations. This enormous change in the FDI graph after the financial crisis is mainly due to a decline in investments from transnational corporations that are located in the European Union. As the world’s economy has...
From the 1970s, there has been a wave of liberalization in China, which was introduced by Deng Xiaoping. This is one of the key reasons to the rise of China to be one of the economic giants in the world. In the last 25 years of the century, the Chinese economy has had massive economic growth, which has been 9.5 percent on a yearly basis. This has been of great significance of the country since it quadrupled the gross domestic product (GDP) of the country thus leading to saving of 400 million of their citizens from the threats of poverty. In the late 1970s, China was ranked twentieth in terms of trade volumes in the whole world as well as being predicted to be the world’s top nation concerning trading activities (Kaplan, 53). This further predicted the country to record the highest GDP growth in the whole world.
In the year 2007, China and India ranked first and second respectively in the list of ideal foreign direct investment (FDI) destinations, according to A T Kearney, a global strategic management consulting firm (The Press Trust of India Limited, 2007a). The two nations, because of their similarities in geopolitical, economic and demographic aspects, are often compared with each other. To determine which one is more attractive for businesses to expand to, this essay will examine the business environment of both countries from the following perspectives: political/legal, economic, socio-cultural and technological.
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China's development is praised by the whole world. Its developments are not only in the economic aspect, but as well in its foreign affairs. Compared with other developed countries, China is a relatively young country. It began constructing itself in 1949. After 30 years of growth, company ownership had experienced unprecedented changes. Entirely, non-state-owned companies can now be more involved in sectors that used to be monopolized by state-owned companies.
FDI is typically regarded as a mode of cross-border inter-firm collaboration which connects with important equity stake and efficient power in managerial decision making in international enterprises (de Mello, 1999). FDI is also an external factor which boost Thailand’s economic growth through employment, transfer of technology and knowledge and relocating manufacturing facility. However, there is increasingly movement of production base into China and India instead of Thailand. As a result, the Thai
wate18005&it=r&p=AONE&sw=w&asid=820ae530c5fee2f671440f99e21dbb46 Nagheli, S., Nagheli, E., & Sadeghi, B. (2013). The impact of foreign direct investment and
FDI inflow is divided into four (4) main sectors: agriculture, industries, infrastructure and tourism. FDI in the agricultural sector amounted to US $ 794.5 million in 2011, US $ 556.6 million in 2012 and a sharp increase of US $ 1,128.8 million in 2013. However, it started to decline of US $ 264.7 million in 2014 and US $ 482.6 million FDI flows in the infrastructure sector, which amounted for US $ 3,129.8 million in 2015 compared to the industrial sector, amounted for US $ 919.3 million and the tourism sector represents only US $ 111.9 million in
India allows a profuse, attractive, and trader friendly investment. India is pulling on encouraging foreign investment. India posses most liberal and transparent plans on foreign direct investment (FDI) among chief economies around the globe