How the Dragon Captured the World Export Markets: Outsourcing and Foreign Investment Lead the Way

Abstract

This paper explores several theories regarding how China has become highly successful in capturing world export markets. The paper concludes that increased competitiveness is dependant on, but not limited to several factors discussed in detail including, exchange rate undervaluation, low wage rates and excess labor resources. Direct foreign investment which enabled China to produce products that meet world market specifications, brought new technology and foreign management, played a key factor. Reasons for China’s advantage over other East Asian countries are explored. The merits and methods of various measures of China’s competitiveness and comparative competitiveness are also discussed.China exports, comparative advantage, competitiveness, purchasing power parity, exchange rate, undervaluation, devaluation, international comparisons, foreign direct investment, technology