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The Institutional Foundation of Foreign-Invested Enterprises (FIEs) in China

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  • Yasheng Huang

Abstract

Foreign-invested enterprises (FIEs) are now an important component of the Chinese economy. Since 1992, the growth of FIEs has been exponential. However our understanding of the institutional factors driving the FIE growth remains limited. This paper uses data from 39 industries in China for a period of three years (1995-1997) to explore the institutional foundation of the FIE growth. Our findings suggest that the debt obligations on the part of the SOEs and the local control of the SOEs promote the growth of FIEs and that some of the foreign direct investment (FDI) inflows result in acquisition of existing assets and shift asset controls from SOEs to FIEs.

Suggested Citation

  • Yasheng Huang, 1999. "The Institutional Foundation of Foreign-Invested Enterprises (FIEs) in China," William Davidson Institute Working Papers Series 264, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:1999-264
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39649/3/wp264.pdf
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    Cited by:

    1. WHALLEY, John & XIN, Xian, 2010. "China's FDI and non-FDI economies and the sustainability of future high Chinese growth," China Economic Review, Elsevier, vol. 21(1), pages 123-135, March.
    2. World Bank, 2006. "Foreign Capital Utilization in China : Prospects and Future Strategy," World Bank Other Operational Studies 19623, The World Bank.

    More about this item

    Keywords

    foreign direct investment; economic transition; China;

    JEL classification:

    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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