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Role Of Government For Fdi In Essay

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It is a widespread belief that the root cause of China’s economic growth is the massive amount of FDI inflows into China . Under the influence of the paramount leader, Deng Xiaoping, who reformed and led to the opening of China , China recorded the second highest FDI inflow in the world (Coughlin & Segev, 2000). Government policies, which are the internal drivers of FDI, aided the escalation of inward FDI and have propelled China into one of the fastest growing nations today . The focus of this essay is on the pervasive role of the Chinese government in strengthening FDI inflows, thus enhancing in economic growth in China. The Special Economic Zones (SEZ) policy, encompassing more flexible laws and regulations, has been implemented to cultivate a robust business environment . In view of this policy, the government abolished local protectionism, de-monopolized the Chinese firms in the market and attracted multinational companies by lowering trade barriers (Rodlauer & Heytens, 2002). China adopted a decentralized economy and investments soared as officials could have more control over their zones by awarding incentives and ‘fast passes’ to certain foreign investors . As such, investments are more competitively priced as negotiation of the terms of individually different contracts could be made . With the SEZ policy, investors are highly driven to invest in China, hence contributing to massive FDI inflows and economic growth. To attract FDI, the Chinese workfor...

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