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Multinational enterprises in China, East Asia, Latin America and Eastern Europe: Moving out or moving in?

Busakorn Chantasasawat (Kenan Institute Asia, Bangkok, Thailand)
K.C. Fung (University of California, Santa Cruz, California, USA and University of Hong Kong, Hong Kong)
Hitomi Iizaka (Aoyama Gakuin University, Tokyo, Japan)
Alan Siu (University of Hong Kong, Hong Kong)

Journal of Chinese Economic and Foreign Trade Studies

ISSN: 1754-4408

Article publication date: 6 June 2008

Abstract

Purpose

The purpose of this paper is to examine whether multinational corporations moving into China have a negative impact on the extent of foreign firms moving into other developing countries in East Asia, Latin America and Eastern Europe.

Design/methodology/approach

The paper controls for a comprehensive set of determinants of why multinational enterprises enter the economies of East Asia, Latin America and Eastern Europe and then adds and examines the instrumented foreign direct investment flows into China to proxy the impact of China on these other economies.

Findings

It was found that the multinational enterprises entering into China stimulate investment in east Asia, but have no significant effects on multinational enterprises entering into Eastern Europe and Latin America.

Research limitations/implications

Owing to data constraints, it was not possible to examine if these conclusions hold for different sectors such as the automobile and electronics sectors.

Practical implications

Governments in developing countries should focus on increasing their attractiveness to multinational enterprises. Policies such as lowering of the corporate tax rates should help.

Originality/value

The paper includes a very comprehensive set of factors and then uses foreign direct investment flows into China as a proxy for the impact of China on other economies.

Keywords

Citation

Chantasasawat, B., Fung, K.C., Iizaka, H. and Siu, A. (2008), "Multinational enterprises in China, East Asia, Latin America and Eastern Europe: Moving out or moving in?", Journal of Chinese Economic and Foreign Trade Studies, Vol. 1 No. 2, pp. 122-135. https://doi.org/10.1108/17544400810884691

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited