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The Empirical Research on the Impact of Urbanization on the Foreign Direct Investment

On 04/10/2014, in Finance, by rain

Urbanization is the only way to achieve modernization for a country or region,and whether the rate of urbanization is reasonable depends on the coordination degreebetween urbanization and Economic and Social development, so urbanization will bean important Economic growth point to drive the next round of developmentof China’s. While foreign direct Investment affects formation of the city mainlythrough capital effects, spillover effects, system changes effects and so on. Theintrinsic relationship between urbanization and FDI attracted scholars’ extensiveresearch. Firstly, this paper explain how FDI advances urbanization, how urbanizationaffects FDI, and the internal theory base like the agglomeration economies betweenFDI and urbanization. Next, while differing from the traditional measure which issingle-indicator method, it selects comprehensive strength of urban of the267citiesfrom China and foreign direct Investment as a research object, use the way of analytichierarchy process to calculate the overall strength of the cities’ value which reflectsthe degree of urbanization level better. Further, it chooses panel data to conduct thetwo-stage least squares of simultaneous equations, which proves that the mutualpromoting effects between FDI and urbanization, and demonstrate that the importanceof urbanization scale to attract FDI, such as over-urbanization may hinder theabsorption of FDI. Finally, this paper concludes the policy implications about FDI andregional urban promotion.The main conclusions of this paper will be listed follow. First, there is a closecorrelation between urbanization and foreign direct Investment. The regressionanalysis of panel data shows that the higher the level of FDI, the higher the level ofurbanization. Conversely, raising the level of urbanization will also attract FDI. Thereexists a significant positive correlation between them. Also, the size of urbanizationscale has a profound impact to the attraction of FDI, and excessive overall strength ofurbanization will impede the absorption of FDI. Second, the optimization of industrialstructure promote Agricultural non-Agricultural, thus further the development ofurbanization. At the same time, increased government spending has a positive effectof urbanization. Third, market openness has a negative effect on FDI, mainly due tothe increase of the state-owned enterprises in the GDP output. They indicates thatChina’s industrial enterprises dominated by state-owned, which would weaken the competitiveness of foreign investment.

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Study on the Incentive Effect of Preferential Tax Policy on Foreign Direct Investment in China

On 04/10/2014, in Finance, by rain

China began to make use of FDI, which is short for Foreign Direct Investment, in1979when we started to open to outside. During the past twenty two years, FDI benefitsChina’s Economic development and is helpful to improve the pareto efficiency.Tax policy,as important factor and measure of macro-control, has great incentive effect on FDI. In thepast years, China offered special preferential tax policy to FDI and oriented to certainlocation. The new Law of Corporate Income Tax was carried out in March2007. Facingthe challenge of intense competition of international tax, many researchers begin to thinkabout whether the strategic readjustment of Corporate Income Tax will affect absorbingFDI, and how to improve related policy. This is what this paper mainly focus on as well.So this paper firstly analyze why host country need FDI, why MNC are willing toinvest outside and which location aspects are taken into account, the necessary of usingpreferential tax policy to encourage FDI by related FDI theory. What is more, chapter3introduces the evolution and current situation of FDI and related Corporate Income TaxPolicy.This paper also set up an econometric model basing on the panel data of44citiesduring1989-2009and prove that the preferential tax policy has significant effect on FDIindeed, especially in midland. However, this effect is no longer as strong as before ineastern cities. To sum up, The New Corporate Income Tax does have negative effect onFDI, but the negative effect is limited. At last, this paper puts forward five suggestions oftax policy to encourage FDI and optimizing the structure of FDI.

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Research on Foreign Direct Investment Risks of China Enterprises and Risk Early Warning Mechanism

On 24/09/2013, in Management, by rain

“The strategy of going global” and growing steadily domestic economy propelChinese Enterprises to invest overseas in recent years, the scale becomes larger and hasbrought some Economic benefits. The complexity of international business environmentdetermines that Chinese enterprises must face various risks, such as political risk andmarket risk. During the business process, there are some risks resisting in the internal ofthe enterprises, as operational risk, Management risk and technical risk. So it is urgent totake measures to avoid and control the risks.This paper is divided into six chapters. From the whole framework perspective, it canbe divided into four major sections. The first part mainly introduces the thesis researchbackground and significance of the research and gives a brief description for theframework of the paper, to clarify the relationship between the various chapters.The second part do a detailed analysis on general meaning of the foreign directinvestment risks, characteristics and classification to make the necessary foundation forChina’s foreign direct Investment in risk identification. Then do a detailed analysis on thestatus quo, patterns and problems of China’s foreign direct Investment, followed by furtheranalysis of foreign direct Investment risk. Then do the classification identification of themajor risks of the foreign direct investment combined with the status quo of China’sforeign direct investment, and the typical case of Geely acquisition of Volvo Car in2010.Then do an analysis on the causes of the various types of risk according to theclassification of the above enterprises of foreign direct investment risk.The third part establishes initial early risk warning mechanisms, and builds enterpriserisk early warning organization and operation mechanism, then fuzzy mathematics is usedto analyze the risk impact, finally, the author does an empirical study on the case of Geelyacquisition Volvo Car. At the last part, the author gives some risk avoiding measures according to the aboveanalysis.The text gives a new risk Management model based on the international experienceand domestic company’s actuality and problems. In practice, we should use the risk modelaccording to the fact as it is only a mathematics method which has some limiting factors.

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Analysis of Influence on Foreign Direct Investment to Optimization of the Industrial Structure in Liaoning Province

On 23/09/2013, in Finance, by rain

With the acceleration of China’s Economic development, foreign direct investmentin China has become an important source of funds, and it brings advanced technology toimprove the return on Investment and China’s export structure, enhance the country’sindustrial structure, increase the tax. As China’s Liaoning Province, the eastern coastalprovinces, with their own advantages and Economic environment, gradual introduction offoreign Investment, which not only promotes the growth of total economic output ofLiaoning Province, but also brought advanced technology and abundant capital, inLiaoning Province economic development plays an important role. In such circumstances,how to make better use of foreign direct Investment to promote the industrial structure inLiaoning Province, has become the focus of our attention. We need to further positiveand effective use of foreign investment to develop better policies to foreign investmentand industrial structure, Liaoning Province, combining real mutual benefit, mutualpromotion and to achieve better and faster economic development in our province.Foreign direct investment in the scale and quantity is more and more big in China.They not only invest in labor-intensive industries, but also invest in technology intensiveindustry. Because of our country policy orientation, at the beginning of the reform andopening up, most of the foreign direct investment are investing in developed coastalregions. Along with the rapid economic development of inland, in recent years, theforeign direct investment is to transfer the Midwest. Now, foreign direct investment hasbecome the important investment of liaoning province. Our province is in the industrialstructure optimization stage, positive and effective use of foreign direct investment to theeconomic development of our province plays a vital role. Liaoning province have beenvery focus on the adjustment of industrial structure and the optimization, but because ofhistorical reasons, three times of liaoning province industrial structure development is notharmonious. Liaoning province always is the important development area of thenortheast old industrial base, the second industry account for most proportion, the firstand the third industry development is comparatively backward. At the same time, foreigndirect investment in three times in the industrial structure of liaoning province is notcoordinate. In the second industrial investment is excessive. In the first industry ofagricultural investment rate is very few. Though the proportion of investment in the tertiary industry rises year by year, but investment insufficient still, further inflaming theliaoning province three times of industrial structure is not harmonious, affect theindustrial structure optimization and upgrading. So at this stage for foreign directinvestment in liaoning province, the industrial structure optimization analysis is verynecessary.This paper first to domestic and international about foreign direct investments andthe industrial structure of the study summarized and concluded, this paper puts forwardthe research significance, innovations and disadvantages; Then respectively is foreigndirect investment and industrial structure of meaning and contact analysis; Then liaoningprovince industrial structure present situation and the utilization of foreign directinvestment analysis on the status, through the model describes the foreign directinvestment for three times the influence of the industrial structure and the optimization;Finally the foreign direct investment in liaoning province for industrial structureoptimization put forward policy Suggestions and to improve the utilization of foreigncapital to promote the rapid development of economy in liaoning province.

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The Study of FDI Technology Spillover Effect on China’s Automobile Industry

On 23/09/2013, in Finance, by rain

In2009, the United Nations Conference on Trade and Development (UNCTD)says the foreign direct Investment of the United States is firmly held the top spot,while China has come in second surpassing France and the United Kingdom whichcame in second and third separately in2008. Foreign direct Investment in China hasnot only promoted China’s sustained Economic growth, but also improved the qualityof Economic growth in China. With the further development of the economicglobalization,foreign direct investment receives more and more attention of hostcountries,at the same time, the research on technology spillovers effect of FDI havealso become a hot topic. Automobile industry is an important pillar industry for thenational economy and plays an important role for the national economic and socialdevelopment. At present, multinationals have become a leading force for China’s autoindustry, the domestic enterprises have had to compete with multinational companies.It is necessary for us to scrutinize pros and cons that the FDI has brought about, andthen propose the corresponding suggestion for the sound development of the Chineseautomobile industry. This research is of great theoretical and practical significance.At first, the paper introduces the situation of the theoretical and empiricalresearch on technology spillovers effect of foreign direct investment both at home andabroad. Then, it analyzes the conduction mechanism and influence factors abouttechnology spillovers effect of foreign direct investment. Taking the former studyresults into account, it summarizes the routes for demonstration and imitation, linksbetween manufacturers, competition and human resources flow, and also analyzes thefactors affecting technology spillovers. Next regarding automobile industry of theBohai area as the research object, it demonstrates the development situation ofautomobile industry FDI in this area and the positive influence that FDI has produced;through the establishment of model on the automobile industry in the region, itconcludes that FDI technology spillovers exist;the paper also takes the BeijingHyundai as an example, by the case research form, specifically analyzes the effect ofFDI on the local automobile Enterprise’s technology spillovers from the perspective of Enterprise’s microscopic stratification. Finally, the paper puts forward thecorresponding proposals on how to make a better use of FDI and expand FDItechnology spillover.

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Risk Perceptions of Chinese and Dutch Investors Operating in the African Market a Comparative Study

On 21/09/2013, in Finance, by rain

This study contributes to the finance research that examines how country-specific investors’ risk perceptions of investments in Africa differ. In this case, risk perceptions of Chinese and Dutch professionals, working on Africa investments for policy banks and institutions in China and the Netherlands respectively, are compared. Existing literature suggests that Chinese and Western investors perceive importance of various risks differently. However, no conclusive research has been performed on Africa specific risk perceptions of Dutch and Chinese investors.By means of a statistical analysis of survey results, I examine how country and project risk perceptions differ between Chinese&Dutch professionals working for financial institutions that invest in Africa. Eighteen Dutch investors and fifteen Chinese investors from four different financial institutions ranked twenty-six risk factors on a Likert type scale. By following a distribution fitting approach, the risk factors were ranked by their level of importance for both samples.The results show that although there are various similarities between both samples’risk perceptions, the ranking of the priority risks is substantially different. Chinese investors perceive political country risks, such as conflicts, government stability and bureaucracy quality, and religious and ethnic tensions as very important. The Dutch investors find the project risks; corporate governance, financial project risks and Environmental and Social risks most important. Similarities between both samples risk perceptions can be found in the average importance of corruption risk, the high importance of Environmental and Social risk, and the little importance of a country’s Economic and financial risk. This study suggests that based on the similarities in risk perceptions, common grounds can be found for cooperation in the African market.

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The Research on the Dynamic Effect of Foreign Direct Investment on Carbon Dioxide Emissions

On 21/09/2013, in Finance, by rain

With the rapid flow of international capital in the world, the foreign directinvestment flows into our country in an increasing rate and it makes the strength ofeconomy in our country stronger. However, the foreign direct Investment also to someextent brings some Environmental problems on carbon dioxide emissions in a certaindegree. Relevant data show that China is the country which has the most carbondioxide emissions in the world. Therefore in order to meet the urgent needs, thetheory and empirical analysis of this problem is a task which brooks no delay.The theory which is the effect of foreign direct Investment on carbon dioxideemissions is divided into two conduction mechanism of positive and negative effect.The conduction mechanism of the positive effect of foreign direct investment oncarbon dioxide emissions is following: with the increasing amount of foreign directinvestment, the change of the mode of foreign direct investment, the change of thenational income, clean technology diffusion and the adjustment of trade structure willeffectively promote the formation of low carbon environment. The conductionmechanism of the negative effect of foreign direct investment on carbon dioxideemissions is following: with the increasing amount of foreign direct investment, thechanges of production scale, regional structure distribution as well as thecontroversial technology diffusion will lead to the deterioration of low carbonenvironment.This paper analyses the effect of foreign direct investment on carbon dioxideemissions using the dynamic panel data which is from2000to2010in30provinces ofChina and two-step system method. Empirical analysis includes the national model,the regional and the trade model. Through a series of empirical analysis theconclusions are as follows: to the hole country, effect of foreign direct investment oncarbon dioxide emissions is positive; regional differences of carbon emissions inChina are very evident, and the eastern region is dynamic maximum and the central isdynamic minimum; to the trade model, in the manufacturing industry effect of foreigndirect investment on carbon dioxide emissions is negative. But in electronicinformation and construction industry effect of foreign direct investment on carbondioxide emissions is positive. Empirical analysis is combined with the theoreticalanalysis, and the industry influence mechanism is further elaborated. According to the above analysis, finally put forward the following policysuggestions: firstly, improve the industrial structure of foreign direct investment;secondly, strengthen the low carbon Environmental protection policies andinstitutional orientation; thirdly, perfect and improve the low carbon environmentalprotection laws and regulations; finally, encourage domestic enterprises to learnforeign clean technology.

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The Empirical Study about the Foreign Direct Investment and the Economic Development in Hainan

On 21/09/2013, in Finance, by rain

The impact of foreign direct Investment in the Economic development of Hainan is studied in this paper. In the circumstances of Economic globalization, foreign direct Investment has already become one of the driving forces of a country or region’s Economic development. After the reform and opening up, Hainan’s foreign direct Investment and local economy have been rapidly developed. Firstly,the Basic theory of use foreign direct investment at home and abroad are reviewed, then defines relevant concepts and summarizes empirical analysis of foreign direct investment.On this basis, through establishing econometric model and using cointegration analysis and Granger causality test to test time series of economic variables, this paper focuses on the impact of foreign direct investment in Hainan on the economic growth, import and export trade, labor employment, industrial structure and formation of local capital. The test results indicate:Cointegration relationship exists between foreign direct investment and GDP growth in Hainan. Each additional one percentage of FDI increased, GDP will increase by0.45percentages. In the short term, there isn’t any casual relationship between GDP and FDI, but in the long run, GDP and FDI has unidirectional Granger causality which shows that GDP is Granger cause of FDI while FDI is not Granger cause of GDP.Cointegration relationship exists between FDI and Hainan imports and exports. Each additional one percentage of FDI increased, IMPORT will increase by0.59percentages, EXPORT0.49percentages. In the short term, one-way causal relationship exists between FDI and IMPORT which means FDI is the Granger cause of IMPORT increase. But in the long term, there is no causal relationship between IMPORT and FDI. One-way causal relationship also exists between EXPORT and FDI which means EXPORT increase is the Granger cause of FDI inflows increase. FDI is not the Granger cause of EXPORT.Cointegration relationship exists between FDI and Hainan province labor employment. Each additional one percentage of FDI increased will lead to0.066percentage increase of employment. FDI is the Granger cause of L, but L is not the Granger cause of LNFDI. Only one-way causal relationship exists between them.Hainan FDI increase has contributed to the growth of the three major industries. Each additional one percentage of foreign direct investment increased, the first industry will increase by0.5percent, the secondary industry0.54percent and the tertiary industry0.63percent.There is a significant positive relationship between Hainan total fixed asset investment and the current residents’ savings. Each RMB1of current household savings increased, the capital stock will increase by about RMB0.596. But Hainan foreign direct investment exerts no significant influence on domestic capital formation. Each RMB1of community savings increased, the domestic capital that affected by FDI will increase by about RMB0.422. Flow of FDI has no significant impact on the domestic capital that affected by FDI in Hainan Province. In short, foreign direct investment in Hainan does not reflect the “squeeze into” or “crowding out” effect.Through empirical test, we can concluded that in Hainan Province small amount of foreign direct investment and lower level and quality lead to the limited impact on the economic development of Hainan. At the same time, foreign direct investment exerts different influences on Hainan GDP, imports, exports, employment, three industries and the total fixed asset investment, among which the three industries especially tertiary industry is most influenced, import and export volume especially import next, then GDP and employment. In addition, FDI has no effect on the total fixed asset investment.Finally, according to research findings, this paper puts forward some policy recommendations on how to absorb and utilize foreign direct investment. To speed up local economic development, Hainan must take the following measures:optimizing the investment environment, attracting more foreign direct investment, innovating system, deepening the system reform, providing support for the policies and regulations, expanding sources of foreign direct investment, implementing diversified investment strategy, broadening channels of foreign capital, innovating investment way, optimizing the industrial structure, expanding investment area, guiding foreign direct investment in various counties and reasonable layout.

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The Research on FDI’s Impact of Hefei City

On 19/09/2013, in Finance, by rain

In today’s society, along with Economic globalization, the Economic between countries are more closely,people pay more attention to foreign direct Investment which is the engine of economic growth, however, scholars study areas are mainly concentrated in large national or provincial level and the research from the perspective of the capital city or prefecture-level cities is minimal, therefore, this research paper will analyze concentrated in capital cities.Hefei which is the capital of Anhui Province, in August2011, the State Council give more administrative area. Now it has policy advantages, locational advantages and funding advantages, Hefei not only the fastest growing cities in Anhui Province, but also attracts the most FDI. The goal is to build forward for the modernization of emerging central city of Yangtze River Delta region following the Shanghai-Nanjing-Hangzhou and have a greater influence on the regional mega-cities in China. Along with the the Hefei growing economic, foreign direct Investment is becoming increasingly clear that pulling effect on the economy. In this context, the study of FDI and economic development in Hefei, the existence of a causal relationship, the analysis of FDI has a significant role in promoting economic growth of Hefei explore between FDI inflows and import and export trade relationship will Hefei to introduce the formulation of foreign policy and foreign trade policy has played a good theoretical support.Based on the above background and purpose, firstly, explain the status of foreign direct investment in Hefei, and from the perspective of22cities in the Yangtze River Delta, through the comprehensive analysis of FDI performance index and potential index,we noticed Hefei between22cities in the Yangtze River Delta is still”unrealized potential city “.In order to attract more foreign investment, the article further analysis of the advantages in the region attract investment in Hefei, the industrial base, the investment area and investment-oriented.On the basis of the above analysis, through the establishment of the relevant econometric model, then use co-integration test and Granger causality test on the relationship between Hefei Foreign direct investment and regional GDP and import and export,from the empirical analysis results can be seen foreign direct investment make strong pulling power, you can pull the GDP increased by0.78%when the the Hefei use of foreign direct investment for every1%increase in GDP in Hefei; however, import and export the increase on Hefei use of foreign direct investment growth has a strong stimulating effect can make foreign direct investment, when Hefei import and export for each additional1%, FDI can increase of1.3%.Based on the above, in order to improve the size and quality of foreign direct investment, also to play better role of FDI on long-term economic growth in Hefei, the article on the one hand from the strategic level, pro-active in attracting foreign investment should be preferred to introduceand increase the intensity of digestion and absorption, in order to promote their own innovation to optimize the investment structure; the other hand, from the tactical level, continue to facilitate technology transfer from Hefei immediate reality, and increase services and strategic emerging industries to attract foreign capital and strengthen the construction of soft environment, in order to increase Hefei’s foreign investment.

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Risk Analysis of Chinese Enterprises’Foreign Direct Investment

On 19/09/2013, in Management, by rain

Since the implementation of the strategy of China’s Reform and Opening-up to the outside world, the economy has been sustained the rapid development in the past thirty years. China has made outstanding achievements. Particularly China accessed to the World Trade Organization (WTO) before eleven years. The socialist market economy of Chinese characteristic integrates into the Economic globalization of the world. China has repositioned in the global economy and trade pattern, realized the role from the global “Made in China” to ” China Global Manufacturing” and changed the role from “Output Foods” to “Output Capital”. Foreign direct Investment plays a very important role in them. With the scale of Chinese Enterprise about foreign direct Investment, Chinese Enterprise is faced with Investment Risk increased significantly. Therefore, a correct understanding of China’s Foreign Direct Investment Risk, effectively prevented the Investment Risk, is the decision-making core problem of our country enterprise about foreign direct investment.Based on the introduction of foreign direct investment and its risk on the basis of the theory, the paper elaborates the situation of our country enterprise about foreign direct investment and focuses on the analysis of foreign direct investment faced a variety of risks, and their sources. The text combines with the actual business according to extension theory, selects the index of the risk of enterprise about foreign direct investment, and tries to build the extension early warning model of foreign direct investment. It uses the relevant data to inspect the extension early warning model of the study. There can warn the possible risk of county. The paper puts forward the corresponding measures in order to guard against the risk of overseas investment. The writer expects to be able to provide the reference and support for investor decision-making.The innovation of this paper lies in the extension field correlation model, which is applied to the enterprise foreign direct investment risk early-warning model, enriched the risk early-warning method of analysis. There be highly operability and flexibility to the practical application. Because this is a bold attempt, there are inevitably some deficiencies, which need further research and improvement.