Foreign Investment: China

Abstract

In Chapter 3 we discussed an alternate view that could explain the inflows of FDI in different neighbourhoods. The last two or three decades have witnessed marked changes in the global organization of industry with far-reaching effects for the evolving patterns of integration of developing countries into world economy. FDI affects resource allocation in several ways. The presence of MNC affiliates may affect capital accumulation, industrial structure and performance, trade propensity and many other structural characteristics of the host economy. Thus it is natural to assume that MNCs do influence, at least to some extent, the observed patterns of industrialization and trade orientation in host countries.