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THE EFFECTS OF TAIWAN DIRECT INVESTMENT IN CHINA ON TAIWAN

Lawrence Wang

Global Journal of Business Research, 2011, vol. 5, issue 2, 63-72

Abstract: Foreign direct investment (FDI) is an important area of research in Finance. Taiwan capital is flowing to China at an increasing rate. Taiwan direct investment in China has reached a sum of more than U.S. $200 billion. Taiwan now suffers a serious economic downturn and high unemployment, when Taiwanese firms close their factories at home and move them to China. In addition, the Taiwan government recently lifted all controls on capital flows and transfer of technology from Taiwan to China. This policy action has further worsened economic conditions in Taiwan. The concerns of Taiwan’s business over dependence on China set in motion political events and the military threat of annexation by China. These events prompted this study. Using a survey approach, the study aims identify major effects of Taiwan direct investment in China on Taiwan’s economy and methods for coping with the effects. The study also analyzes some related issues related to government policies and administrative efficiency. The model can serve as a reference source for policy makers to cope with the ill effects of FDI.

Keywords: Taiwan Direct Investment (TDI); Foreign Direct Investment (FDI); Economic Cooperation Framework Agreement (ECFA) (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2011
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