A critical assessment of the role of FDI in China's development and a proposal for a new policy agenda.

摘要

This dissertation presents a critical assessment of the contribution of foreign direct investment (FDI) in China to four essential development elements, including development finance, trade expansion, technological development, and employment generation.;First, the thesis finds evidence that FDI financing entails often underestimated risks and costs. A significant presence of mobile FDI may destabilize the financial order. Moreover, returns to FDI and the high import-dependency of FDI-related trade put a considerable drain on the balance of payments. The reliance on foreign capital for development finance amounts to building an unsustainable financing scheme. Given the fact that FDI financing is risky and costly, the thesis suggests that tapping into foreign capital should not be the main objective of attracting FDI and that FDI flows and stock should be monitored.;Second, the thesis notes that FDI in China generally expands trade but export-oriented FDI does not relieve, but aggravates the aggregate demand constraint. This renders the FDI-driven, export-led growth strategy counterproductive. Moreover, due to its high import-dependency and shallow integration into the local economy, export-oriented FDI fails to drive the formation of dynamic comparative advantages. The thesis proposes that the government should reform its FDI policies, whereby FDI can be utilized to improve China's position in the internationally integrated production system.;Third, the thesis demonstrates that low technological-content, export-oriented FDI does not entail substantial technology transfer and diffusion. Likewise, the lack of technology diffusion channels and the under-capacity of local technological absorption undermine technology transfer and diffusion by the market-seeking FDI. The thesis highlights the essential role of the government in fostering FDI-assisted technological development.;Finally, this thesis shows that FDI has a positive but insignificant effect on job creation. Furthermore, the thesis contends that the massive entry of FDI and the "contagious" labor practices by foreign invested enterprises invoke three levels of competitive menace in the labor market, which marginalize the Chinese workers. The thesis proposes that the Chinese government should not rely on FDI to create jobs and that the government should reform its current labor policies and institutions to improve the employment effects of FDI.