The liberalization of Foreign Direct Investment

The liberalization of Foreign Direct Investment (FDI) regimes by different countries has been geared to attracting more FDI and to achieve the benefits that FDI brings. Such liberalization at the present time is fostering a boom in the increasing globalization of business. Such a boom can produce considerable benefits for economic growth and development, but it can also lead to the domination of certain markets by a few major corporations. Transnational corporations thus often have greater competitive strength so that FDI might increase their market concentration and raise the scope for restrictive or anti-competitive practices by firms (1997 World investment report, 1998, 28). Many countries find that attracting FDI serves their needs and helps develop their economic structure, and an analysis of the issue of FDI shows how it can benefit the country receiving it even if it may create inequities in the global marketplace.

FDI, as Luiz Jr. (1999) notes, "is conventionally defined as a form of international inter-firm co-operation that involves significant equity stake and effective management decision power in, or ownership control of, foreign enterprises" (Luiz, 1999, 2). However, Luiz says that it also encompasses other broader, heterogeneous non-equity forms of cooperating involving the supply of tangible and intangible assets by a foreign enterprise to a domestic firm, and such broader collaborative associations may include most types of quasi-investm

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ave national competition policies in place (1997 World investment report, 1998, 28). VOLUME OF FDI IN CHINA FDI records are being broken globally in terms of the absolute levels of FDI flows and stocks, the number of cross-border mergers, acquisitions, and cross-border, inter-firm agreements, as well as in terms of total sales by TNCs and their foreign affiliates. FDIs are also an expanding source of outflows as well as leading TNCs headquartered in developing countries boost their investments elsewhere at a high rate. One dramatic factor boosting FDI has been an acceleration of mergers and acquisitions, especially in the United States and Western Europe. Flows of FDI into developed countries still far exceed those into developing countries, but the gap has been narrowing. Inflows into developing countries rose by 34 percent in 1994 to a record $129 billion, while inflows into developed countries gained only slightly to reach $208 billion. At the same time, outflows from developed countries rose fractionally to $295 billion while outflows from developing countries stood at $51 billion and rose to 15 percent of the 1996 FDI total. China is once again the second largest FDI recipient in the world, and the nation continue

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