Developmental Strategies in a Global Economy: The Unexpected Emergence of China's Indigenous Auto Industry
32 Pages Posted: 13 Aug 2009 Last revised: 4 Sep 2009
Date Written: 2009
Late industrializing nations confront the challenge of creating strong domestic firms under conditions of intense competition from industrialized countries, steep technological learning curves, scarcity of capital, and evolving regulations within the global trade regime. The appeal of FDI lies in its potential to bring badly needed capital, along with technology, production and management expertise. Yet FDI can also result in the domination of the local industry by multinational corporations. The Chinese auto industry provides a case in which FDI has been widely encouraged and yet independent upstarts without foreign investment are emerging as major players. This paper argues that the emergence of China’s indigenous auto industry has not been the outcome of a targeted developmental strategy (e.g., well-conceived FDI policy), but the rather the unexpected result of China’s entry into the World Trade Organization, increased access to international capital markets, and the globalization of auto production networks.
Keywords: FDI, developmental strategies, China, automotive industry, globalization
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