Question

Explain why Chinese Outward Foreign Direct Investment does not increase per capita output in
the recipient countries.

Answer 1

China has been characterized by high skill and low cost labor. So when ever an Outward FDI takes place from China this induces employment for Chinese people rather than for people in other countries where business is expanded. Secondly majority of production is done in China and then assembled in other countries which creates growth of opportunities in China more as compared to other countries.

As a result output per capita is more or less the same in other countries and is more in Chinese economy as it is strategy and asset seeking FDI process.