EU – China and the Non-transparent Race for Inward FDI

Lars Oxelheim and Pervez Ghauri
Additional contact information
Pervez Ghauri: King's College London, Postal: Department of Management, 150 Stamford Street,, London SE1 9NH, UK,

No 745, Working Paper Series from Research Institute of Industrial Economics

Abstract: In this paper it is argued that the restructuring following the stiffer competition stemming from increased global integration will trigger a race between countries to attract inward foreign direct investment (FDI). It is further argued that this race consists of last minute efforts and tailor-made packages designed by governments and their agencies to temporarily improve their country’s otherwise inferior profile. This race is non-transparent and the factors used to compete for inward FDI (the 'elements' of the race) deviate from those of long-term efforts to develop a favourable investment climate and improve productivity, as well as medium-term efforts, such as lowering corporate taxes. The paper elaborates on the research problem of properly understanding the drivers of inward FDI in the absence of data on the elements of the non-transparent race. It also addresses the economic policy problem following from this race with a scenario where a large share of global FDI ends up in China, putting the cohesion of the EU at stake and triggering a regional race within China.

Keywords: Inward FDI; China; European Union; Investment-diverting Policies (search for similar items in EconPapers)
JEL-codes: E61 F15 F21 F23 F36 F42 G18 G34 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2008-04-15
New Economics Papers: this item is included in nep-cna and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: EU-China and the non-transparent race for inward FDI (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0745

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