Research on the Trade Effects of Foreign Direct Investment

Author: Zhu Tingjun
Publisher:
Publish Date: 2006-02-01
Features: This book studies the factors and mechanisms of FDI's impact on the quantity, structure, and benefit distribution of host country trade, and conducts an empirical analysis of China. In terms of the quantity effect of trade, it clarifies the factors influencing the trade substitution and creation effects of FDI. Using classic theoretical models and cross-sectional data, it analyzes the relationship between China's provincial export trade and FDI inflows in stages, exploring the reasons why FDI promotes trade growth at both the national and regional levels. The book argues that in this historical period marked by opportunities and challenges such as global industrial transfer, the rise of new trade barriers, and increased trade friction, after basically resolving the issues of savings and foreign exchange gaps, the objective of utilizing foreign capital should be oriented toward technological progress and industrial upgrading. Policies should focus on raising technical, environmental, and labor standards for foreign investment entry; establishing a competitive market environment to allow normal competition among foreign investors, between domestic and foreign investors, and between domestic and foreign products and imported products, in order to achieve greater technology spillover effects; increasing investment in human capital to enhance the ability to capture technology spillover effects from FDI and promote trade structure transformation; and actively promoting China to become a key location for multinational corporations' innovation and R&D activities, gradually improving China's position in the global division of labor.