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Export Requirements and Special Features of Inward Foreign Direct Investment in China


  • Liu, Xiaohui

    (The University of Luton)

  • Yingqi Wei

    (Lancaster University)


The paper investigates the relationship between the policy of export requirements and special features of China's inward foreign direct investment (FDI), and examines how trade-related investment measures affect the investment decisions of multinational firms. A theoretical model is constructed that allows us to analyse how location advantages affect the equilibrium regime under which multinational firms and government policy toward FDI co-exist endogenously. The model also exam the welfare effects of export requirements policy by comparing with an alternative policy - production tax. The findings from this study accord well with the evidence regarding China's inward FDI. The main results indicate that the policy of export requirements is sub-optimal.

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  • Liu, Xiaohui & Yingqi Wei, 2002. "Export Requirements and Special Features of Inward Foreign Direct Investment in China," Royal Economic Society Annual Conference 2002 130, Royal Economic Society.
  • Handle: RePEc:ecj:ac2002:130

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