Abstract
Since China opened its economy to foreign investment in 1979, it has become the second largest Foreign DirectInvestment (FDI) destination in the world after USA. Over the period 1997 to 2008, the manufacturing sector hasdominated China’s FDI inflow, however, when manufacturing activity is bifurcated into low and high technologyclasses, it becomes evident that China is in a transition stage moving from FDI in traditional low-tech activity toa high-tech manufacturing environment. This paper attempts to summarise and explain the key determinants ofFDI inflow across low and high technology manufacturing industry across three geographical regions of China.In the paper we empirically investigate the determinants of FDI high-low tech inflow by market size, labour cost,labour quality, and infrastructure. We also investigate the theoretical foundations for China’s transition from alow tech to a high tech manufacturing environment.
Highlights
Divisions and 169 groups in GB/T44754-2002, but in ISIC Rev.3, it is only 23 divisions and 61 groups
Since China opened its economy to foreign investment in 1979, it has become the second largest Foreign Direct Investment (FDI) destination in the world after USA
Over the period 1997 to 2008, the manufacturing sector has dominated China’s FDI inflow, when manufacturing activity is bifurcated into low and high technology classes, it becomes evident that China is in a transition stage moving from FDI in traditional low-tech activity to a high-tech manufacturing environment
Summary
We analysed and summarised the determinants of FDI for both low and high-tech industrial production across three regions in China. Main determinants and impacts of Foreign Direct Investment on China's Economy, OECD Working Papers on International Investment, OECD publishing. The tertiary industry refers to all other economic activities not included in primary or secondary industries, including traffic, transportation, storage and post, information transmission, computer services and software, wholesale and retail trades, hotel and catering services, Financial Intermediation, real estate, leasing and business services, scientific research, technical services and geological prospecting, management of water conservancy, environment and public facilities, services to households and other services, education, health, social security and social welfare, culture, sports and entertainment, public management and social organisation, and international organisations. With adopted foreign capital, management know-how, trained labour, and technology spill-over effect, China possesses the capacity to adopt high-technology-intensive manufacturing sectors, especially within the chemicals, machinery, transport equipment, electronics and telecommunication industries
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