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Foreign direct investment

Developing China: The Remarkable Impact of Foreign Direct Investment

The Hinrich Foundation commissioned Professor Michael J. Enright to lead a major research project identifying the impact of foreign direct investment on China’s economic development.

One of the most important features of China’s economic emergence has been the role of foreign investment and foreign companies. The importance goes well beyond the USD 1.6 trillion in foreign direct investment that China has received since it started opening its economy.

Using the tools of economic impact analysis, the author estimates that around one-third of China’s GDP in recent years has been generated by the investments, operations, and supply chains of foreign invested companies.

Hinrich Foundation Michal Enright Book Event Indonesia
Professor Michael Enright, author of "Developing China: The Remarkable Impact of Foreign Direct Investment" discusses his book findings in Indonesia.

In addition, foreign companies have developed industries, created suppliers and distributors, introduced modern technologies, improved business practices, modernized management training, improved sustainability performance, and helped shape China’s legal and regulatory systems.

The power of FDI

These impacts have helped China become the world’s second largest economy, its leading exporter, and one of its leading destinations for inward investment.

The book provides a powerful analysis of China’s policies toward foreign investment that can inform policy makers around the world, while giving foreign companies tools to demonstrate their contributions to host countries and showing the tremendous power of foreign investment to help transform economies.

Editorial reviews

“The development of China’s economy has achieved a great success since the onset of its program of economic reform and opening. Foreign direct investment made a significant contribution to this success. This has been accounted by numerous works home and abroad. Professor Enright makes a comprehensive assessment on the achievements that China made in attracting foreign investment and the positive contributions of foreign investment to the development of China’s economy, with scientific and systematic analysis, with the innovative application of the economic impact analysis techniques, which is for the first time used in such kind of analysis, with typical corporate and city case studies, and with the tests on enlarged datasets and revised models based on existing econometric research. As said in the book, there are regional differences and time period differences in the impact of foreign investment on China’s economy. Foreign investment is important to China’s economy, in the past, at present, and in the future. Summarizing the past enables us to be better prepared for the future. China is deepening its reform in all aspects and expanding its open up scope. China’s usage of FDI also comes into a new development period. The Chinese version of this book, published at this moment, is of specific value for officials, business people, analysts, and others to read and to think.”

Li Gang, Vice President, Chinese Academy of International Trade and Economic Cooperation, MOFCOM

Developing China is the most comprehensive study of the role of foreign invested enterprises in China’s economic transformation available. It analyzes the evolution of government policy toward foreign investment and, more importantly, provides a path breaking analysis of the contribution of foreign firms to the growth of output and employment in China.”

Nicholas Lardy, Anthony M. Solomon Senior Fellow at the Peterson Institute for International Economics


Michael Enright

Michael Enright is a leading expert on competitiveness, regional economic development, and international business strategy. He joined the University of Hong Kong as Professor of Business Administration in 1996 after six years as a professor at the Harvard Business School.

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