Business Finance
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Question Description

I’m trying to study for my Economics course and I need some help to understand this question.


I want you to help me to edit chapter 1 and 2

and I want the whole chapters around 48 - 50

so add pages in each chapter

and I wrote some notes on the file so follow them .

thank you

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Final Answer




Research report
Student Name:
Institutional Affiliation:
Course Title:


Foreign Direct Investment (FDI) has rapidly become one of the most sought-after means of
amalgamating development funds across emerging economies (Borensztein, De Gregorio, & Lee,
1998). In addition to Eduardo’s work, many other economic analyses – like those of Mathur,
Aparna and Kartikeya (991-998) – on the topic of FDI, have helped shed light into the various
means in which FDI is sourced internationally but then utilized for domestic gains. In building off
such academic contributions, this project wishes to add to the discussion by examining FDI as a
macroeconomic stimulus for China, the now second most prevalent economy globally. Therefore,
the principal concern of this thesis is to analyze the affiliation between the FDI and Chinese
economic growth from 1982 to 2017. Currently, China is among the powerful leading economies
The Chinese economy adopted an open policy in the late 1970s by abandoning the longterm closed strategies due to the government inefficiencies as well as the experiences from the
capitalist system. As the fundamental reform, China considered partisan policies that would attract
FDI into the economy to accelerate industrialization, and the initiative has been a success. The two
prime objectives were to ensure foreign investments into various regions of the country to boost
infrastructural development and also to reap high from the advanced technologies that
accompanied such opportunities. However, it is also necessary to note that any foreign enterprise
would only flow into potential surroundings where prosperity is guaranteed. China, on the other
hand, displayed a vast market with a cheap and readily available labor force, affordable costs for
land and also lucrative tax credits (Yuan, Bi, & Moriguichi, 2006). In strategizing for the increased


flow FDI, the Chinese government joined WTO in 2001 while promising to open its economy
entirely. The economy is ahead of the rest of big international competitors regarding FDI inflow
for the preceding three decades. It is beyond reasonable doubt that this economy has made
tremendous growth through FDI and manufacturing technology inflow, and a new trend occurred
since 1994 when foreign enterprises took over the primary source of foreign reserve.
The country had an accumulation of $279 billion FDI stock by 2010, while from 2000
through 2010, it had a record of higher FDI inflows than any other large economy. As a litmus test
to the inflow performance, both recent global economic crisis never ditched the performance as it
stood above it while every country was adversely affected. In 2005, the enterprises increased to
$60.3 billion, and progressively in 2006, the records stood at $69.5 billion, while 2007 had an
inclined record of $82.7 billion (Fung, Iizaka, & Tong, 2004). By breaking the economic turmoil
monotony, it hit a higher notch of $105.7 billion, which was by around 17.4% growth, in 2010,
and 11.3% expansion was recorded in 2011 seeing the inflow reach the $117.7 billion. However,
a decline or contraction was on record in 2012 when the figures of the year fell below the 2011
mark by 3.7% to manage $113.3 billion.
On a critical perception, with eyebrows raised, the relationship between FDI inflow, GDP,
and fixed investment is worth checking. Various studies depict that economic growth is on a faster
pace than FDI inflow coercing the GDP fall by 2.3% while gross fixed capital formation followed
the same direction by 4.1% after their respective 5.8% and 14.3% peak recordings in 1994. It
confirms the fear of dismal FDI contributions in the Chinese capital formation, where the high
rates of savings of the domestic economy take credit for propelling the fixed investment plans
since the new tenure of reforms (Fung, Iizaka, & Tong, 2004). Recent studies have paid great
attention to this subject matter, and there is now a huge literature body studying the relationship


between FDI and China’s growth. Earlier, the view on economic growth was within the context of
neoclassical models, which argue that the contribution of FDI relates to indirect impacts such as
enhancing the efficiency of the economy, as well as the direct effects such as boosting the amount
of capital. Over time, it is now evident that FDI can also enhance economic growth by contributing
to externalities like technological diffusion. According to Balogh, Liu and Krstic (2001), to further
the previous point, such distributions are significant when FDI flows come from a highly
developed to a less developed economy.
China is not exceptional for economic segregation, which follows from the limitations
practiced by the regime of the day at the onset of the FDI inflow. The inequality in growth in
various cities within the country brings in a gap to address. The coastal regions of China were the
primary zones where FDI was permitted to have influence. From these reforms and measures,
growth in those strategic areas has far outpaced the successes of the other BRICS nations (namely,
Brazil Russia India and South Africa). For instance, in the period 1980-1990, the southern part of
Guangdong, in the Pearl River Delta, experienced its most rapid growth levels due to the vast
inflow of skilled labor and capital from Hong Kong (EIU, 2005). However, it is noticeable that the
interior parts of the country have not progressed as quickly as the coastal regions. Hence it is the
primary concern of this research work to ascertain the effect of FDI on the economy’s growth from
1982 to 2017.
The study has the following objectives:

To scrutinize the effects of FDI on China’s economy

To determine whether FDIs are crucial tools for economic development, and,


To establish both the positive and negative consequences of FDI in the marketplace.


How does FDI impact the Chinese economy?

What is the effect of FDI on economic development?

Do FDIs have positive and negative consequences in the marketplace?

While forming the hypotheses of the study, we employed the null supposition based
following the above research questions.

FDI does not impact the Chinese economy

FDI has no significant effect on economic development

FDIs have no impacts in the marketplace

The thesis seeks to contribute knowledge not only to the government of China but also to
other developed and developing countries that may be interested in encouraging various forms of
FDI inflows and outflows. The findings of this study might also help the government of China to
know the multiple ways in which FDI can promote development in the marginalized provinces in
the country. Moreover, the government could also put restrictions on areas where FDI is

Cornell University

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