Foreign Direct Investment Inflow in High-Tech Industries in China

Abstract

This paper seeks to evaluate the economic, social and environmental impacts of foreign direct investment (FDI) inflow in high-tech industries in China. The most crucial economic gain from FDI is the potential for technology spillover and transfer. This is the driving force behind China's willingness to collaborate with multinational corporations via establishing businesses, research and development facilities and universities. Some of the benefits from FDI inflow in high-tech industries include access to advanced technology, increase in productivity, improvement in human capital, and increase in standard of living and quality of life. The costs are dependency, imitation as opposed to innovation, regional disparities in development, environmental degradation, and decrease in social welfare of the community. The paper shows that the ability of China to efficiently absorb technology from transnational firms leads to autonomous innovation, and results• in sustainable benefits, in the long run.