New Competition; Foreign Direct Investment and Industrial Development in China Defended on Thursday, 18 November 2004

The primary aim of this study is to examine inward FDI as an industrial phenomenon  how the introduction of a new competitive force through FDI inflows influences the development of industries. It offers an interdisciplinary effort to advance the understanding of the FDI impact on industrial development in emerging markets. Based on a multidimensional, dynamic and comparative approach to analysing industrial advancement, this study investigates in particular the development of two Chinese industries  the automotive industry and the electronics and ICT sector. It illustrates the critical role of the policy environment in determining the effects of inward FDI. The policy environment at the industrial level is largely defined by both entry restrictions and trade barriers. This study suggests that, under certain circumstances, multinational corporations and domestic firms might collaborate to dominate a market, for instance by establishing international joint ventures, which reinforces the problems of market dominances, welfare losses, and regulatory capture. This study also seeks to help policy makers understand the evolution of industries and to provide a fact base for decision making at both the industrial and national level. It advocates a more sophisticated and competition-friendly framework of public policy, which requires both the introduction of new institutions and the upgrading of existing policy instruments. This framework is vital to ensure the contestability of markets, to reap the benefits of FDI, to tackle the negative effects of FDI, and to promote long-term sustainable industrial development.

Keywords

Competition, Market Structure, Foreign Direct Investment, Industrial Development, Innovation, Automotive Industry, Information and Telecommunications, Competition Policy, Industrial Policy, China