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The impact of foreign direct investment in China - Thesis Example

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The Impact of Foreign Direct Investment in China Introduction: The forefather of modern day economics Adam Smith in his book An Inquiry into the Nature and Causes of the Wealth of Nations proposed in favor of absolute advantage. Under this doctrine, in a two country-two commodity model, the country with an absolute advantage over the other would have indulged in the production of both the commodities and there will be no trade between these two countries (Smith)…
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The impact of foreign direct investment in China
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Download file to see previous pages His hypothesis was based on relative efficiency and opportunity cost that determined the production of commodities by each countries and eventual exchange of the same between them leading to trade between them that can easily be visualized in terms of international trade (Ricardo, 1821). However, much before both Smith and Ricardo, in ancient times China was a trade superpower and was involved in active trade transaction with many European and other Asian countries. This might resembles with theorists favoring bullions or monetarist’s theory of economic thought but neither of them extends an absolute explanation. Chinese indigenous goods that mainly comprised of valuable and costly silk of highest quality, extremely fine porcelain products, gun powder, and compass and last but not the least printed papers made their way into other Asian lands through the famous silk root. The same had also swum through the seas and oceans to knock the shores of the European countries where they made huge profit, along with great reputation (Bodde, 1942; Chow, 2005, p.1). This sort of trade was technology driven and came out of certain resource monopoly. Not only those were mere goods that helped the Chinese economy to reach the pinnacle of its success but ground breaking inventions and innovations that held the Chinese head high at the global arena. Ironically most of those inventions were later credited to the western world. Historically China is a country with huge population; the most populated country of the world and in terms of area it also holds a substantial position. Both of these together created a huge market in China that was wealthy and a point of immense attraction for other countries to set up business ties with the same. It would not be an exaggeration that Chinese technology at that time was far more improved than the rest of the world but a technological backwardness soon crippled the nation as the Chinese monarchy was coming to an end. Inequality of wealth among the Chinese people and absolute ignore on behalf of the late monarchs as well as the upper class of the basic needs of the common people might be considered as the rime cause of this decline. The Chinese monarchy was riddled with undercurrents and mutual conflicts that added to the problem and especially the European businessmen cemented their feet taking advantage of this situation. Greed of the upper class that were busy to reap the last fallen fruits of Chinese monarchy took no care of the common Chinese and dreamt of building their glass house over the flesh, blood and bones of the common people (Mou, 2009, p.483). Once a flourishing nation; was thus turned into a lucrative playground for the European business bullies who were lurking as opportunist vultures to make the most out of this wealthy but technologically backward trailing country that was wrestling among their own class conflicts. Through this process China lost their dominant global presence and entered a state of stagnation. Amidst this catastrophic environment the emergence of Sun Yat-sen might be considered as the first fresh air. Though his life was short lived yet he fought the war lords bravely and is ...Download file to see next pagesRead More
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