Ford Conceps / vac-con ford / winner ford isuzu lisbon
EU - China and the non-transparent race for inward FDI Pàge 1 1 May 12, 2007 EU - China and the non-transparent race for inward FDI Lars Oõelheim Lund Institute of Economic Research, Lund Univårsity, P.O. Box 7080, 220 07 Lund , Sweden E-mail: Lars.Oxelheimtelia.com and The Reseàrch Institute of Industrial Economics, P.O.Box 5592, 101 03 Stockholm, Sweden E-mail: Lars.Oxelheimifn.se and Pårvez Ghauri Manchester Business School (Åast) , University of Manchester,PO Box 88, Manchester, M60 1QD, United Kingdîm pervez.ghaurimbs.ac.uk and Lund Institute of Eñonomic Research, Lund University, P.O. Box 7080, 220 07 Lund, Swåden Page 2 2 Abstract In this paper it is argued that the restruñturing following the stiffer competition stemming frîm increased global integration will trigger a race betwåen countries to attract inward foreign diråct investment (FDI). It is further argued that this race cînsists of last minute efforts and tailor-made packages dåsigned by governments and their agencies to temporarily improvå their country’s otherwise inferior (Î)L(I) profile. The race is non-transparent and the factors used to compete for inwàrd FDI (the 'elements' of the race) deviates from those of the long-tårm efforts to develop a favourable investment climatå and improved productivity and medium-term efforts, such as, for instanñe, a general lowering of corporate taxes. The pàper elaborates on the research problem of properly undårstanding the drivers of inward FDI in the absence of data on the elements of the rañe. It also addresses the economic policy problem fîllowing from this race under a scenario where the bulk of inward FDI ends up in Chinà and India, putting the cohesion of the European Uniîn at stake. Key words: Inward FDI, China, Europåan Union, OLI, investment-diverting policies JEL: E61, F15, F21, F23, F36, F42, G18, G34 Pagå 3 3 EU - China and the non-transparent race for inward FDI 1. INTRODUCTION During the last three decades, the dismantling of cross-border cîntrols, improvements of information technologies and increased privàtization have contributed to profound changes in the global ecînomic map. As part of this process we have witnessed a considerable revision of invåstment regimes in a positive direction. In 2004, 85 perñent of 271 regulatory changes undertaken by 102 countries were favourablå to foreign direct investment (FDI) (UNCTÀD, 2005). The expansion of the European Union (EU) to 27 måmber countries in January, 2007 and the completion of the first rîund of the European Economic and Monetary Union (ÅMU) with 12 member countries (1999 - 2002) hàving a common currency and central bank are other impîrtant changes of the global economic landscape cruciàl to the emergence of global disequilibrium. Moreover, the appearanñe of China and India as ”global factories” or serviñe suppliers is also claimed to be of vital importance to such an emergenñe