Foreign Direct Investment of China in Latin America, Africa and the Middle East - Research Proposal Example

Research Proposal http cpds.apana.org.au/Teams/Articles/china_as_economic_engine.htm The research aims at establishing if Chinas FDI in unstable regions of Africa, Latin America and Middle East are sustainable in the long-run. The rationale for engagement in the study is that the fast changing global political landscape may affect the sustainability of the country’s current economic growth and policies in the long-run. The researcher will use both qualitative and quantitative approach in collecting information for the research study. The primary data from the research study will be presented for analysis in the fourth chapter of the study. The secondary data collected from existing literature will be used throughout the study to supplement the primary data. The theory presented in the literature review will be obtained from existing literature on the topic of study. The researcher will use the literature review to critically and objectively analyse the data in establishing research gaps and coming up with possible areas of study. Simple random sampling, purposive and snow ball sampling will be used as the sampling techniques in the study. The researcher will also adhere to ethical considerations when carrying out the study. The limitations of the study such as financial constraints and time of the study are also considered in this proposal. Table of Contents Table of Contents 2 Introduction 4 Preliminary review of literature 4 Introduction 4 Summary 6 Objectives 7 Research questions 7 Methodology 7 Sampling 8 Data collection methods 8 Qualitative Research 8 Quantitative Research 9 Summary 10 Operationalization of research study 11 Ethical issues 11 Data presentation 11 Primary and Secondary Data 11 Time plan 12 Limitations 13 References 14 Gu, J. Humphrey, J. & Messner, D. (2007). Global Governance and Developing Countries: The Implications of the Rise of China. Retrieved from: www.interscience.wiley.com 14 Introduction Since the political and economic reforms of 1970, China has been experiencing an impressive rate of development characterised by rapid economic growth (Blanchard & Shleifer, 2001). This has resulted to the country’s increase in global economic and political influence in the past three decades. The Chinese government has invested heavily in third world countries in Africa, Latin America (Santiso et al 2004) and the Middle East in the spheres of manufacturing and construction. Critiques, however, view the country’s rapid export, investment and economic growth as a bubble because of the state driven nature of the economy which is heavily reliant on administrative methods in the management of financial and economic outcomes (ECLAC, 2005). Furthermore, the country is dependent on exports, has exposed banking institutions, environmental stress, unstable political climate and a fast aging population. Thus, if China was to be a pacesetter for the future of the globe, then there would be a great challenge as the practices of the country are incompatible with those of the West such as the rule of law, individualism, individual freedom, democracy, universal ethics and even coordination of economic activities through financial outcomes (Ikenberry, 2008). These Westernised ideologies have influenced the international order in the past centuries. The changes in the international environment resulting from the global economic crisis are an implication that the economic models of the Chinese have outlived their time. Thus, the leaders of China, lacking a market-oriented way to further increase the country’s power, are turning to assertive nationalism as an alternative even though suggestions about fundamental reforms are emerging from time to time (Edwards & Jenkins, 2005). The problem thus lies in the future of the country’s economy and if it will sustain economic growth in the future with the fast changing political atmosphere across the globe and primarily in areas where China owns foreign direct investment. Preliminary review of literature Introduction In the past three decades, the world has witnessed rapid economic growth and political influence of China (Zhang, 2012). These rapid changes by the country have sparked speculation of the country’s future potential to act as a future potential driver of the global economy (Luttwak, 2012). However, according to (Lucas, 2000) there have been concerns as to whether the development and economic growth of the country is sustainable in the long-run and if the methods used by the country could be adopted by other countries seeking to emulate the growth and development of the country (Groves et al, 1995). A majority of critical scholars remain skeptical of the country’s global leadership citing that the country may not withstand the changing global political atmosphere primarily due to the fact that the country has unstable political climate (Stares, 2011). The model of the country has been the manufacture of products at low costs due to cheap labor and low cost of raw materials (Walter & Howie, 2012). Furthermore, the country is accused of “stealing” designs and concepts from foreign companies manufacturing their products in the country and reverse engineering or producing imitations similar to these items. Such negative practices of the manufacturing sector in china might as well lead to the downfall of the great economy (Shambaugh, 2000). The survival of the country’s economy looks bleak in the future unless the country adopts new measures that are dynamic to the current needs of the globe. The foreign direct investment (FDI) of China in Latin America, Africa and the Middle East portrays the country as a global economic engine (Lam et al, 2013). The fact, however, is that this is far from the reality as China currently runs on mercantilist goals (Montinola et al, 1995). The economic methods underpinning the progress and investment of the country across the globe have involved the unproductive use of capital and the protecting of financial institutions with bad sheets by the government through maintaining current account surplus in the country and in a majority of China’s economic tributaries (Herzberg & Herzberg, 2013). The manufacturing sector of the country which is a great driver of the country’s economic growth and sustenance also faces threats as a result of the building blocks used. The global markets are slowly drifting away from the cheap labored country and considering other manufacturing countries in Asia and Africa as a result of the ill-practices in the Chinese manufacturing sector (Goldstein, 2006). According to Gu et al (2007), the rapid growth and size of China coupled by the increasing assertiveness of the country represent a challenge to the current established global order. They propose that the future impacts and dynamics of the power shift in the architecture of global governance and developing world are not determined at the moment and are far from clear. The scholars’ analysis of the country’s participation in the WTO and their stance on development policies indicate the extent to which the rise of china will create variable tensions dependent on ways in which the basic interests of the PRC clash with the interests of the Western nations (Gu et al, 2007). In the recent past, China was seen as a developing nation and the idea that the country could seriously challenge the U.S was often ignored. The country’s recent global economic development has proven the country to be a significant global player capable of challenging the U.S and changing the rules of the game. Gu et al (2007), however, propose that the political environment of China and the changing political landscape of the globe which differs greatly from that of China challenges the survival of the country as a strong global economic powerhouse. The ideologies of the West which sustain the current global order differ greatly from the neo-Confucian ideologies that fuel the Asian power house (Li & Zhou, 2005). Even though the rise of china has a continued implication of a tectonic power shift on the global arena in the long-term, the eventual transition from a unipolar to a multipolar power constellation may not be a bed of roses. This is because the dynamics of the future impacts of the said power shifts for the architecture of the global governance and the world economy are indeterminate due to the rapid changing global-political atmosphere spanning from parts of Europe, Middle East and Africa (Li & Zhou, 2005). Furthermore, the global financial crisis affecting the global economy worsens the situation. The concrete global governance strategies implemented by the Western countries over the centuries will thus continue to run the current global order and in the event that the West consolidates to challenge China, then the Asian country stands a little chance of survival in the global, political, and economic scene in the long-run (Philips & Sul, 2009). Summary Economic growth alone may not hold a country at the top of the global scene or guarantee the long-term welfare of a country. Other factors such as the political environment and development ideologies adopted by a country are key determinants of a country’s welfare in the long-run (Wolf, 2001). It is agreed that China has registered exemplary economic performance over the years, but the main question and area of concern is whether the country can sustain this development and continued economic growth in the years to come (Huang, 1996). The control of the world’s economy and tectonic power transition from the U.S to China thus proves to be a great challenge if China is to wage war solely against the West whose ideologies and principles have shaped the current global order and sustains a vast percentage of the world’s economy (Jin et al, 2000). China is thus much better integrating with the West and working in cohesion to ensure continued global economic and political influence as opposed to working autonomously and collapsing in the future as a result of unsustainable political and economic measures currently used by the country (Keohane & Milner, 2002). Objectives The main objective of the research study is to establish if Chinas FDI in unstable regions of Africa, Latin America and Middle East are sustainable in the long-run. The other objectives of the study are; a) To find out if China’s manufacturing sector can survive competition from other countries in the long run. b) To investigate if the political change in China can move in step with the economic growth of the country c) To establish the impact of the changing world’s political landscape to the future survival of China. Research questions The following research questions were formulated from the objectives; a) Can China’s manufacturing sector survive the competition from other countries in the long run? b) Can political change in China move in-step with the economic growth of the country? c) Does the changing world’s political landscape have an impact on the future survival of China? Methodology The researcher will use both qualitative and quantitative data collection methods in carrying out the research study. By default, this means that the research will be both inductive and deductive in nature combining a looped transition of theory building and testing the hypothesis in the research study from an analysis of the data collected to establish valid conclusions. The researcher will thus generalise concepts and theory, formulate hypothesis for the study, collect data for the research and test the hypothesis when analysing the collected data. The sampling techniques used and methods of data collection will complement the qualitative and quantitative approach of the research study. Sampling The researcher will use various sampling techniques on the sample population of participants for the research study. In line with this, the quantitative sampling techniques used will be aimed at giving the researcher knowledge on the research topic, identification and generalization of patterns and enabling future researchers to carry out further research on the topic. For this approach, probability sampling will be the best approach. According to Jackson (2009), probability sampling will enable the researcher generalise the population of study, predict random events and compare random events to the collected data. With the qualitative approach, the researcher will be focusing on viewing the study topic through the eyes of the respondents, describing the context in detail (with facts), establishing the occurrence of social change and allowing flexibility in the research. For this approach, therefore, the researcher settled for non-probability sampling as social actors are not as predictable as objects, randomisation of events is irrelevant to social life and probability sampling would be inefficient and expensive in a qualitative approach. The probability sampling technique that the researcher decided to use was a simple random sample while purposive and snow ball sampling techniques were the preferred non-probability sampling techniques which the researcher decided to use in the study. Data collection methods Qualitative Research The methods of data collection in the study will be dependent on the approach. While collecting qualitative data, the researcher will use tools such as interviews and observation. The qualitative research, which is primarily exploratory, will enable the researcher understand the underlying concepts and opinions of the participants on the subject of study (Babbie, 2001). The qualitative research is important as it will enable the researcher develop insights and ideas for potential use in the quantitative research study (Babbie, 2001). The variance of the methods of data collection for qualitative research is as a result of the relatively small size of sample population and respondents selected to fill certain quotas of the study. The researcher plans to remain objective in the study while collecting the qualitative research data. The interviews will be conducted by the researcher using a pre-prepared interview script. The interview process will be researcher-led with the researcher asking the respondents various interview questions and recording the responses of the participants for analysis. The researcher will however ensure that the interview process remains interactive to encourage the participant’s to feel free during the interview process and give in-depth information for the study. The researchers will also engage in observation in the collection of primary research data for the study. Direct observation will enable the researcher get first-hand experience in the field during the study. Through observation, the researcher will collect primary data directly from what he encounters in the field during the study. Direct observation is an important tool as it enables the researcher to eliminate distortion in the collection of the data which may be experienced when using other data collection tools such as questionnaires (Bhattacharya, 2006). Furthermore, the observations will occur in a natural setting as opposed to controlled experiments in laboratories enabling the researcher interact directly with the participants of the study in their natural environments. The observations will be recorded by the researcher for analysis. Quantitative Research Quantitative research is a research approach in which a researcher quantifies a problem by the way of numerical data or data which may be transformed into statistics (Jackson, 2009). Quantitative research is important in the quantification of attitudes, behavior, opinions, and other defined variables. Quantitative research will enable the researcher generalize the results collected from the sample population of the study (Jackson, 2009). With a quantitative approach, the researcher will be able to use the measurable data to uncover patterns and formulate facts in relation to the research topic (Jackson, 2009). In collecting quantitative data for the study, the researcher will use more structured quantitative data collection tools. The researcher will use telephone surveys and questionnaires in the collection of the quantitative data for the study. The quantitative data collected from the research will be analysed by the researcher using computer software. Statistical and mathematical approaches will be employed by the researcher to form a precise distinction between opinions and facts. The researcher will also use specific formulae to cater for the specific data collected in the quantitative approach. The questionnaire for use in the study will contain a combination of open-ended, rating-scale, close-ended, and partially open-ended questions. With the open-ended questions, the researcher will collect a variety of responses from the participants (Hale, 2012). The close-ended questions will be used in the questionnaire to provide a basis of statistically analyzing the primary data obtained in the study (Hale, 2012). The rating scale questions will also be used to establish a statistical basis when analyzing the responses of the participants. The researcher will circulate copies of the sample questionnaire among friends and carry out a couple of interviews with the friends before engaging in the actual research. This pilot study is important as it will allow the researcher to revise and edit the demographic questionnaire and skeletal interview script accordingly before embarking on the actual study (Jackson, 2009). This step is also important as it not only builds confidence in the researcher, but also enables the researcher to refine his interviewing skills before embarking in the actual interviews while carrying out the research study. Summary By the use of both qualitative and quantitative data collection for the research, the researcher will ensure that the research study is fulfilling. A combination of both enables the flexibility of the research. With a qualitative research design, the research is able to evolve as the researcher can use the knowledge they gain in the study to adjust the data to be extracted from the next participant of the study (Jackson, 2009). This ensures the evolving of the data and research through the gained information. In contrast, a quantitative research desires the collection of identical data from the participants of the study therefore; evolution in the methodology is unacceptable (Jackson, 2009). Quantitative research expects the retrieval of specific data at all times while qualitative research is dynamic and flexible allowing change throughout the research (Jackson, 2009). Thus, with the use of both approaches, the researcher will make the most out of the study and in the end; the research study will be highly informative, descriptive and factual for use by interested players and scholars engaging in similar research in the future. Operationalization of research study When carrying out the study, the researcher will collect the primary information of the study by the use of questionnaires, interviews, telephone survey and direct observation. The primary research will be conducted in Chinese manufacturing companies. The researcher will interview the top management inquiring of the different policies adopted in their manufacturing process. The researcher will then observe the manufacturing processes in the Chinese factories and record these observations. The questionnaires will be circulated around China to collect data about the current and future economic state of the country. The researcher will then conduct telephone surveys in other four Western countries to compare the information collected from China and the West. The secondary information for the study will be collected from previous research and case studies containing information on the study topic. The researcher will finally compare and analyse the data collected to draw conclusions on the research study by reconciling the data collected and the initial objectives of the study. Ethical issues Research studies are supposed to be carried out with various principles and moral guidelines in mind. According to Kothari (2004), this is what comprises of ethics in research. In the study, the researcher will adhere to these ethical concerns. Before starting the research study, the researcher will make formal calls to the participants of the study seeking their consent to participate in the study. The researcher will then send copies of an introduction letter to the willing participants containing the objectives and scope of the study. All the participants will be treated with full confidentiality and anonymity and no personal details or information of the participants’ will be reflected in the final research report. Data presentation Primary and Secondary Data The primary data for the study will be collected by the researcher using tools such as interviews, telephone survey and questionnaire. This data will be presented in form of charts and tables. The graphical representation of the data will enable the researcher establish trends and patterns while analysing the data. Secondary data for the research will be used to supplement the primary data collected. The secondary data will be collected from case studies, journals, books and credible websites. Secondary data will also be used in the validation of the data collected from the primary sources. Time plan Figure 1: Gantt Chart Activity April May June July Proposal Writing Preparation of Instruments Data Collection Data Analysis and Interpretation Report Writing Submission of Final Report Source: Researcher In the first month of the study, the researcher will write and submit the initial proposal to the supervisor. After getting a response from the supervisor, the researcher will make necessary amendments to the research study being proposed. The researcher will commence on the actual study after getting approval of the proposal from the supervisor. During the second month of the study, the researcher will assemble the necessary instruments of the study. This time will also be used by the researcher to contact the participants of the study in preparation for the actual research. The researcher will collect, analyze and interpret data during the third month of the research study. Finally, the researcher will wind up the entire project in the fourth month by compiling a final report of the study and submitting it to the supervisor. Limitations When carrying out a research study, it is the wish of every researcher to obtain full understanding of all the relationships in the study. However, due to structural constraints, every research study is limited and thus a number of assumptions may be made during the study. In carrying out this study, the researcher will be faced by the challenge of financial constraints deterring his wishes to travel to the locations of every participant when conducting the study. Furthermore, the participants of the study will be a representative sample of the study group as the researcher may not be able to conduct the study with the entire population. The research timeframe is too short to enable the researcher obtain large amounts of data due to beaurocracy existent in many organisations when processing the research request which may force the researcher to work with a small sample size that will be available in the stipulated time frame of the study. When carrying out direct observations, the researcher may also not be able to establish the authenticity of the respondent’s behavior as individuals under observation may act differently from how they act in natural settings. References Babbie, E. (2001). The Practice of Social Research: 9th Edition. Belmont, CA: Wadsworth Thomson. Bhattacharya, D. K. (2006). Research methodology. New Delhi: Excel Books. Blanchard, O., & Shleifer, A. (2001). Federalism with and without Political Centralization: China vs. Russia in transitional economics: How much progress? IMF Staff Papers 48, 171– 179. ECLAC. 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