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Foreign Direct Investment in China Manufacturing Industry –Transformation from a Low Tech to High Tech Manufacturing

By Kevin Daly and Kelly Liu

Abstract

<p>Since China opened its economy to foreign investment in 1979, it has become the second largest Foreign Direct<br />Investment (FDI) destination in the world after USA. Over the period 1997 to 2008, the manufacturing sector has<br />dominated China’s FDI inflow, however, when manufacturing activity is bifurcated into low and high technology<br />classes, it becomes evident that China is in a transition stage moving from FDI in traditional low-tech activity to<br />a high-tech manufacturing environment. This paper attempts to summarise and explain the key determinants of<br />FDI inflow across low and high technology manufacturing industry across three geographical regions of China.<br />In the paper we empirically investigate the determinants of FDI high-low tech inflow by market size, labour cost,<br />labour quality, and infrastructure. We also investigate the theoretical foundations for China’s transition from a<br />low tech to a high tech manufacturing environment.</p

Topics: LCC:Business, LCC:HF5001-6182, LCC:Commerce, LCC:HF1-6182, LCC:Social Sciences, LCC:H, DOAJ:Business and Management, DOAJ:Business and Economics
Publisher: Canadian Center of Science and Education
Year: 2011
DOI identifier: 10.5539/ijbm.v6n7p15
OAI identifier: oai:doaj.org/article:d103de15bc6e44c7ba5f79e7deface89
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