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The role of the State on foreign direct investment regulation in China

Author

Listed:
  • Paula Carvalho
  • Isabela Nogueira

Abstract

This article intends to corroborate the argument advocated by heterodoxeconomists such as Akyüz, Chang and Furtado that state regulation is crucial to extractingthe possible benefits of foreign direct investment (FDI). We do so by analyzing the policiesused by China since its opening to this type of investment in 1979. The article innovates byscrutinizing China’s major FDI laws, regulations and guidelines that compose the formalframework under which foreign-owned enterprises have operated in the country for almost40 years. We then address the traditional view that China developed simply because itincreasingly opened its market to foreign investment and adopted a foreign investment-ledgrowth model. We argue that it was because of this strong regulation that FDI had sucha positive effect, contributing to technological transfer and trade expansion, although notdefining the ratio of capital accumulation. JEL Classification: O16.

Suggested Citation

  • Paula Carvalho & Isabela Nogueira, 2023. "The role of the State on foreign direct investment regulation in China," Brazilian Journal of Political Economy, Center of Political Economy, vol. 43(1), pages 256-274.
    • Handle: RePEc:ekm:repojs:v:43:y:2023:i:1:p:256-274:id:2395
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/2395/2332
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    More about this item

    Keywords

    Foreign direct investment; regulation; China;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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