3.2C SPEZ and attitude to FDI

• Attitudes to FDI =

  1. viewed FDI as positive - creating new jobs, better paying than the existing alternative with reliable wages and better working conditions.
  2. FDI by developed country TNCs expanded to new areas
• Subsidies = payments to producers to encourage them to produce a certain amount of a product.

  • Governments may give out subsidies to increase FDI from foreign businesses
• Special economic zones = Enclaves where investors receive special tax, tariff and regulatory incentives. 
• Chinas Open door Policy (1978) =

  • slowly introducing economic liberalisation and opening up to FDI while maintaining a strict one party political system. 
  • SEZs were created on the coast, such as the Pearl River Delta Zone, the Shanghai Economic Zone, attracting a rapid inflow of FDI. 
  • Exports soared from $2 billion in 1980 to $200 billion in 2000. 
  • By 2006, China was receiving $60 billion in FDI per year.