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Chinese Outward FDI in Agriculture and Rural Development: Evidence from Northern Laos

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  • Phanhpakit ONPHANHDALA
  • Terukazu SURUGA

Abstract

China's outward FDI started when China opened up to the outside world in 1978. China, however, is not widely recognized as an important FDI exporting country until the discourse of its resource-seeking investment in Africa in recent years. Although most of outward FDI stock actually went just to one destination (Hong Kong), China has been increasing the investment in Asian and African developing countries sharply in recent years. However, the investment in leasing and business service, banking, and energy/mining sectors create fewer jobs. The small amount of investment in agriculture sector can have larger impacts on agriculture and rural development. There is a very limited existing study on how Chinese investment affects agricultural transformation and inequality in the process of rural development. This paper aims to fill that knowledge gap through a case study of Laos, a country where China's FDI has played a key role in economic development since 2000s. From the field surveys in Oudomxay Province, Northern Laos in 2009 and 2011, the results suggest that Chinese investment has emergently transformed the agriculture system from subsistence to commercial farming. There is evidence of a significant impact of Chinese investment on reducing the poverty level and income inequality. However, not all households and villages can receive these benefits. Uneven development among households and villages is fundamentally embedded in the starting period and the production choice with Chinese merchants.

Suggested Citation

  • Phanhpakit ONPHANHDALA & Terukazu SURUGA, 2013. "Chinese Outward FDI in Agriculture and Rural Development: Evidence from Northern Laos," GSICS Working Paper Series 25, Graduate School of International Cooperation Studies, Kobe University.
    • Handle: RePEc:kcs:wpaper:25
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    References listed on IDEAS

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    Cited by:

    1. David Sedik & Fujin Yi & Richard T. Gudaj, 2020. "Implications of Chinese Farmers in the Russian Far East," American Journal of Economics and Sociology, Wiley Blackwell, vol. 79(5), pages 1615-1622, November.
    2. Souksavanh VIXATHEP & Phanhpakit ONPHANHDALA & Phaythoune PHOMVIXAY, 2013. "Land Distribution and Rice Sufficiency in Northern Laos," GSICS Working Paper Series 27, Graduate School of International Cooperation Studies, Kobe University.

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    More about this item

    Keywords

    FDI; Agricultural Transformation; Rural Development; Poverty; Inequality; China; Laos;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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