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Is China on the Investment Development Path?
Katherin Marton
Fordham University
Cornelia McCarthy
Columbia University
ABSTRACT
The paper investigates the relationship between China’s net direct
foreign investment position and economic development and the investment
development path (IDP) theory introduced by Dunning (1981). Using annual
data for the period 1979 to 2005 and a fourth order single variable
polynomial function we demonstrate that form of the IDP for China and
conclude that China entered stage 3 of the path postulated by the IDP
theory. By analyzing key factors which have impacted FDI inflows and
outflows we find that certain idiosyncratic characteristics of Chinese companies and
institutional factors may limit the significant increase in the
multinationalization of Chinese firms which would be required for the
country to move along the IDP.
Keywords:
Equity Rights Offers, Economic Effect, Capitalization Effect, Rights in
Developing Markets | 
