9 - Local Institutions in a Global Economy
Published online by Cambridge University Press: 12 November 2009
Summary
The rise of China as a manufacturing power has corresponded to profound shifts in the global economy. In the early 1980s, when a consensus began to emerge among policymakers in Beijing that the automotive industry should be the target of industrial development efforts, the environment was a familiar one for a developing country in East Asia, and it was one that centered around the nation-state: the domestic market was heavily protected, linkages to foreign markets and technology were critical, but tightly controlled, and the state was receptive to playing an active role in the development process. As the development process gathered steam in China, the integration of national economies picked up speed and intensity. World export volumes continued to increase, but it was international production that was becoming the primary driver of the global economy and economic development. Whereas in 1980, foreign direct investment inflows formed 11.7% of gross domestic capital formation in manufacturing in developing countries, this number had increased to 36.7% by 1998. There was a slight decline in total FDI flows to the developing world after 2000, largely as a result of declining flows to middle-income Latin American countries, but the flows to China continued to increase, and in 2003 it became the top destination for FDI in the world. The global economy was increasingly becoming a single market for goods, services, capital, and labor, and China was its poster child.
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- Changing Lanes in ChinaForeign Direct Investment, Local Governments, and Auto Sector Development, pp. 273 - 292Publisher: Cambridge University PressPrint publication year: 2006