Open Access Journal Article

How Does FDI-Led Growth Strategy Work? Some Lessons from China for Developing Countries

by Kevin H. Zhang a,*
a
Department of Economics, Illinois State University Normal, IL 61790-4200, US
*
Author to whom correspondence should be addressed.
EAL  2024 3(2):56; https://doi.org/10.58567/eal03020005
Received: 19 December 2023 / Accepted: 5 February 2024 / Published Online: 15 June 2024
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Abstract

Foreign direct investment (FDI) is widely viewed as a key driving force behind China’s exceptional growth performance in the last four decades. This paper investigates several questions posed by China’s success in capturing gains from FDI. What explains that success? Can other countries replicate it, or is it unique to China? What lessons are from China for other countries? China indeed has advantages in attracting FDI such as huge market and cheap labor, the well-designed policy and strategy, however, seem to play more important role in the successful story. Our empirical estimates support on four hypotheses: FDI and GDP growth in China positively interact each other; FDI is helpful to China’s technological progress, FDI promotes China’s industrial development, and FDI stimulates China’s manufactured exports.

Keywords: Foreign direct investment (FDI); FDI-led growth (FKG) strategy; Multinational corporations (MNCs);
Copyright: © 2024 by Zhang. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Zhang, K. H. How Does FDI-Led Growth Strategy Work? Some Lessons from China for Developing Countries. Economic Analysis Letters, 2024, 3, 56. https://doi.org/10.58567/eal03020005
AMA Style
Zhang K H. How Does FDI-Led Growth Strategy Work? Some Lessons from China for Developing Countries. Economic Analysis Letters; 2024, 3(2):56. https://doi.org/10.58567/eal03020005
Chicago/Turabian Style
Zhang, Kevin H. 2024. "How Does FDI-Led Growth Strategy Work? Some Lessons from China for Developing Countries" Economic Analysis Letters 3, no.2:56. https://doi.org/10.58567/eal03020005
APA style
Zhang, K. H. (2024). How Does FDI-Led Growth Strategy Work? Some Lessons from China for Developing Countries. Economic Analysis Letters, 3(2), 56. https://doi.org/10.58567/eal03020005

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