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EU-China and the non-transparent race for inward FDI

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Author Info
Oxelheim, Lars
Ghauri, Pervez

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Abstract

In this paper it is argued that the restructuring following the stiffer competition stemming from increased global integration will trigger a race between countries to attract inward foreign direct investment (FDI). It is further argued that this race consists of last minute efforts and tailor-made packages designed by governments and their agencies to temporarily improve their country's otherwise inferior profile. This race is non-transparent and the factors used to compete for inward FDI (the [`]elements' of the race) deviate from those of long-term efforts to develop a favourable investment climate and improve productivity, as well as medium-term efforts such as lowering corporate taxes. The paper elaborates on the research problem of properly understanding the drivers of inward FDI in the absence of data on the elements of the non-transparent race. It also addresses the economic policy problem following from this race with a scenario where a large share of global FDI ends up in China, putting the cohesion of the European Union (EU) at stake and triggering a regional race within China.

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Publisher Info
Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 19 (2008)
Issue (Month): 4 (August)
Pages: 358-370
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Handle: RePEc:eee:asieco:v:19:y:2008:i:4:p:358-370

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Related research
Keywords: Inward FDI China European Union Investment-diverting policies;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alan Rugman, 1980. "Internalization as a general theory of foreign direct investment: A re-appraisal of the literature," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 116(2), pages 365-379, June. [Downloadable!] (restricted)
  2. Braunerhjelm, P. & Oxelheim, L., 1999. "Does Foreign Direct Investment Replace Home Country Investment? The Effect of European Integration on the Location of Swedish Investment," Research Institute of Industrial Economics Working Papers 522, Research Institute of Industrial Economics (IFN).
    Other versions:
  3. Robert Ford & Wim Suyker, 1990. "Industrial Subsidies in the OECD Economies," OECD Economics Department Working Papers 74, OECD, Economics Department. [Downloadable!]
  4. Peter J Buckley & Pervez N Ghauri, 2004. "Globalisation, economic geography and the strategy of multinational enterprises," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 35(2), pages 81-98, March. [Downloadable!] (restricted)
  5. Oxelheim, Lars & Randøy, Trond & Stonehill, Arthur, 2001. "On the Treatment of Finance-Specific Factors Within the OLI Paradigm," Working Paper Series 554, Research Institute of Industrial Economics. [Downloadable!]
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  6. Braunerhjelm, Pontus & Oxelheim, Lars & Thulin, Per, 2004. "The Relationship between Domestic and Outward Foreign Direct Investment: The Role of Industry-Specific Effects," Working Paper Series 625, Research Institute of Industrial Economics. [Downloadable!]
  7. Peter J Buckley & Pervez N Ghauri, 2004. "Globalisation, economic geography and the strategy of multinational enterprises," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 35(3), pages 255-255, May. [Downloadable!] (restricted)
  8. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February. [Downloadable!] (restricted)
  9. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 29(1), pages 45-66, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Oxelheim, Lars, 2008. "Globalization, Transparency and Economic Growth: The Vulnerability of Chinese Firms to Macroeconomic Shocks," Working Paper Series 768, Research Institute of Industrial Economics. [Downloadable!]
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