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Foreign Direct Investment in China: Some Lessons for Other Countries

Author/Editor: Tseng, Wanda | Zebregs, Harm
Authorized for Distribution: February 1, 2002
Electronic Access: Free Full Text (PDF file size is 762KB)
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Disclaimer: This Policy Discussion Paper should not be reported as representing the views of the IMF. The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Policy Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: China's increasing openness to foreign direct investment (FDI) has contributed importantly to its exceptional growth performance. This paper examines China's experience with FDI and identifies some lessons for other countries. Most of the factors explaining China's success have also been important in attracting FDI to other countries: market size, labor costs, quality of infrastructure, and government policies. FDI has contributed to higher investment and productivity growth, and has created jobs and a dynamic export sector. China's success, however, did not come without some pitfalls: an increasingly complex tax incentive system and growing regional income disparities. Accession to the WTO should broaden China's "opening up" policies and continue FDI's contributions to China's economy in the future.
 
Series: Policy Discussion Paper No. 02/3
Subject(s): Foreign direct investment | China | Labor | Markets
 
English  
    Published:   February 1, 2002        
            Format:   Paper
    Stock No:   PPIEA0032002   Pages:   20
    Price:   US$10.00
       
     
Please address any questions about this title to publications@imf.org.