Going Local: Foreign Investment, Local Development and the Chinese Auto Sector

Abstract

For two decades, the auto industry has been at the core of China’s plans to develop a modern economy. The automobile industry has an enduring appeal for developing countries, in part because it is often thought to be a symbol of a modern economy, but even more importantly because it serves as the hub of an integrated industrial structure: extensive forward and backward linkages create the potential for a substantial positive spillover effect. It is not simply about making cars, it is about developing basic manufacturing capabilities in a wide variety of industries.