Can Emerging Markets Follow China's FDI Growth Recipe?
Can Emerging Markets Follow China's FDI Growth Recipe?
Annual Meeting 2004
China's ability to attract massive amounts of foreign investment does not derive entirely from its economic growth rate or the size of its population, observed Stephen J. Kobrin, Professor of Multinational Management, The Wharton School, University of Pennsylvania, USA. Rather, China leads the developing world in liberalizing its foreign investment policies, he noted. Felipe Larra Bascu Professor of Economics, Catholic University of Chile, Chile, challenged this view, saying he believed that it was China's large marketplace, high growth rate and low costs rather than its investment policies driving FDI. Between these extremes, Paul A. Laudicina, Managing Director, A.T. Kearney, USA, said that interviews with his firm's clients revealed that it was both the size of China's marketplace and its policies that were luring investment.
It is, however, misleading to consider China a single investment destination in any case, remarked Robert Greenhill, President and Chief Operating Officer, Bombardier International, Canada. From an investor's perspective, there are several Chinas: there is a south eastern China that is booming, a western China that is taking off and a north eastern China that is decaying.
The flood of FDI into China also needs to be considered relative to its size, said Fernando Canales Clariond, Secretary of Economy of Mexico. On a per capita basis, FDI into China was actually lower last year than FDI into Mexico. According to Laudicina, China's per capita FDI is the lowest of any emerging market but India. And much of that FDI is actually Chinese money being recycled through Taiwan or Hong Kong and not really foreign at all.
Be that as it may, poorer nations need an increasing amount of FDI to fund development and have to compete globally to get it, said Canales. Costs, political stability and tax incentives are natural inducements to foreign investors, though participants agreed that tax holidays are counterproductive. Canales said many governments fail to undertake the reforms needed to lure FDI because they would be politically unpopular.
On the other hand, FDI can also serve as an excuse for government inaction, thereby retarding development, declared Ethan B. Kapstein, Professor, Department of Economics and Political Science, European Institute of Business Administration (INSEAD). As a result, some economists are now debating whether FDI necessarily translates into sustained economic growth. Greenhill also noted that not all FDI contributes to long term growth. The best type of FDI, he said, involves not just dollars, but also investment in policy development, enhancing corporate know how and stimulating the use of postgraduate degree holders.
Indeed, it is such new skills in corporate management and access to new markets that make FDI such an important ingredient in development, suggested Alan P. Larson, US Undersecretary of State for Economic, Business and Agricultural Affairs. Considered against the relatively low volume of China's FDI on a per capita basis, the new management practices that foreign investors bring have a much greater impact than the sheer volume of investment.
Govindasamy Rajasaharan, Secretary General, Malaysian Trade Union Congress, Malaysia, said that China's success in attracting foreign investment appeared to depend on the absence of labour unions and the ability of an authoritarian government to impose investment regulations with little regard for workers' rights. In South East Asia, he said, companies have begun to use China as a bogeyman to extract concessions from local officials. "China is being used as an excuse," he said. If governments fail to concede, companies threaten to relocate to China. One of the biggest consequences of this pressure is an increasing tendency to replace full time employees with short term contract labour or subcontracted labour, providing companies with greater flexibility and lower costs, but making workers uncertain about their future.
Can Emerging Markets Follow Chinas FDI Growth Recipe - To learn more about this author, visit World Economic Forum's Website.
Like this article? Share it with your friends
22.01.2004
Annual Meeting 2004
China's ability to attract massive amounts of foreign investment does not derive entirely from its economic growth rate or the size of its population, observed Stephen J. Kobrin, Professor of Multinational Management, The Wharton School, University of Pennsylvania, USA. Rather, China leads the developing world in liberalizing its foreign investment policies, he noted. Felipe Larra Bascu Professor of Economics, Catholic University of Chile, Chile, challenged this view, saying he believed that it was China's large marketplace, high growth rate and low costs rather than its investment policies driving FDI. Between these extremes, Paul A. Laudicina, Managing Director, A.T. Kearney, USA, said that interviews with his firm's clients revealed that it was both the size of China's marketplace and its policies that were luring investment.
It is, however, misleading to consider China a single investment destination in any case, remarked Robert Greenhill, President and Chief Operating Officer, Bombardier International, Canada. From an investor's perspective, there are several Chinas: there is a south eastern China that is booming, a western China that is taking off and a north eastern China that is decaying.
The flood of FDI into China also needs to be considered relative to its size, said Fernando Canales Clariond, Secretary of Economy of Mexico. On a per capita basis, FDI into China was actually lower last year than FDI into Mexico. According to Laudicina, China's per capita FDI is the lowest of any emerging market but India. And much of that FDI is actually Chinese money being recycled through Taiwan or Hong Kong and not really foreign at all.
Be that as it may, poorer nations need an increasing amount of FDI to fund development and have to compete globally to get it, said Canales. Costs, political stability and tax incentives are natural inducements to foreign investors, though participants agreed that tax holidays are counterproductive. Canales said many governments fail to undertake the reforms needed to lure FDI because they would be politically unpopular.
On the other hand, FDI can also serve as an excuse for government inaction, thereby retarding development, declared Ethan B. Kapstein, Professor, Department of Economics and Political Science, European Institute of Business Administration (INSEAD). As a result, some economists are now debating whether FDI necessarily translates into sustained economic growth. Greenhill also noted that not all FDI contributes to long term growth. The best type of FDI, he said, involves not just dollars, but also investment in policy development, enhancing corporate know how and stimulating the use of postgraduate degree holders.
Indeed, it is such new skills in corporate management and access to new markets that make FDI such an important ingredient in development, suggested Alan P. Larson, US Undersecretary of State for Economic, Business and Agricultural Affairs. Considered against the relatively low volume of China's FDI on a per capita basis, the new management practices that foreign investors bring have a much greater impact than the sheer volume of investment.
Govindasamy Rajasaharan, Secretary General, Malaysian Trade Union Congress, Malaysia, said that China's success in attracting foreign investment appeared to depend on the absence of labour unions and the ability of an authoritarian government to impose investment regulations with little regard for workers' rights. In South East Asia, he said, companies have begun to use China as a bogeyman to extract concessions from local officials. "China is being used as an excuse," he said. If governments fail to concede, companies threaten to relocate to China. One of the biggest consequences of this pressure is an increasing tendency to replace full time employees with short term contract labour or subcontracted labour, providing companies with greater flexibility and lower costs, but making workers uncertain about their future.
Can Emerging Markets Follow Chinas FDI Growth Recipe - To learn more about this author, visit World Economic Forum's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
Joe DagerJoe Dager is President of Business901, a progressive coaching company providing no-nonsense direction in areas such as Lean Six Sigma Marketing and organized referral marketing. What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe’s ability to combine his expertise with “out of the box” thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with.” - James R. If you want to learn more about Business901, start a conversation with us. We can be found @ Web/Blog: Business901.com Web/Blog: FundingYourNonprofit.com LinkedIn Profile Follow me on Twitter - Visit Joe Dager's Website |
|||
John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
|||
Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to World's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
 |
||
 |
||
|
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Home Party Plan Mistakes Vertical Market Ad Network Aromatic Networking Host Beneficiary Business Building Check List |
|
 | ||
 |
Top 50 HR Blogs 2009
Top 50 HR Blogs 2009 | |
 |
Top 50 Business Plans
Top Business Plan Blogs | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
| ||||||||||||
| ||||||||||||
|
|
||||||||||||