Foreign Direct Investment in China

Topics: Foreign direct investment, Investment, Development Pages: 5 (1035 words) Published: March 20, 2011
Foreign direct investment
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Foreign direct investment (FDI) or foreign investment refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares.[1] Contents


* 1 History
* 2 Types
* 3 Methods
* 4 Global Foreign Direct Investment
* 5 Foreign direct investment in the United States
* 6 Foreign direct investment in China
* 7 Foreign direct investment in India
* 8 Foreign direct investment and the developing world
* 9 See also
* 10 References
* 11 External links

[edit] History

FDI is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization. The figure below shows net inflows of foreign direct investment in the United States. The largest flows of foreign investment occur between the industrialized countries (North America, Western Europe and Japan). But flows to non-industrialized countries are increasing sharply.

US International Direct Investment Flows:[2]
Period FDI Outflow FDI Inflows Net
1960-69 $ 42.18 bn $ 5.13 bn + $ 37.04 bn
1970-79 $ 122.72 bn $ 40.79 bn + $ 81.93 bn
1980-89 $ 206.27 bn $ 329.23 bn - $ 122.96 bn
1990-99 $ 950.47 bn $ 907.34 bn + $ 43.13 bn
2000-07 $ 1,629.05 bn $ 1,421.31 bn + $ 207.74 bn
Total $ 2,950.69 bn $ 2,703.81 bn + $ 246.88 bn
[edit] Types

A foreign direct investor may be classified in any sector of the economy and could be any one of the following:[citation needed]

* an individual;
* a group of related individuals;
* an incorporated or unincorporated entity;
* a public company or private company;
* a group of related enterprises;
* a government body;
* an estate (law), trust or other social institution; or * any combination of the above.

[edit] Methods

The foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods:

* by incorporating a wholly owned subsidiary or company
* by acquiring shares in an associated enterprise
* through a merger or an acquisition of an unrelated enterprise * participating in an equity joint venture with another investor or enterprise

Foreign direct investment incentives may take the following forms:[citation needed]

* low corporate tax and income tax rates
* tax holidays
* other types of tax concessions
* preferential tariffs
* special economic zones
* EPZ - Export Processing Zones
* Bonded Warehouses
* Maquiladoras
* investment financial subsidies
* soft loan or loan guarantees
* free land or land subsidies
* relocation & expatriation subsidies
* job training & employment subsidies
* infrastructure subsidies
* R&D support
* derogation from regulations (usually for very large projects)

[edit] Global Foreign Direct Investment

UNCTAD said that there was no significant growth of Global FDI in 2010. In 2010 was $1,122 billion and in 2009 was $1.114 billion. The figures was 25 percent below the pre-crisis average between 2005 to 2007.[3] [edit] Foreign direct investment in the United States

The United States is the world’s largest recipient of FDI. More than $325.3 billion in FDI flowed into the United States in 2008, which is a 37 percent increase from 2007. The $2.1 trillion stock of FDI in the United States at the end of 2008 is the equivalent of...
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