IDEAS home Printed from https://ideas.repec.org/a/jfr/ijfr11/v9y2018i2p227-235.html
   My bibliography  Save this article

Foreign Capital and International Division Trap

Author

Listed:
  • Wenming Yuan

Abstract

The paper used the panel data from 2000 to 2014 of 9 developing economies to research the effect of FDI on GVC-participation of host countries and International Division of Labor Trap from the two dimensions of theory and demonstration. And further researches are carried on, which shows that FDI is beneficial of deepening GVC-participation of developing host countries. Furthermore, FDI has solidified the international division of labor by driving the developing host countries participate into the international production system leading to be fallen into the trap of international division of labor.FDI has solidified the level of international division of labor in developing host countries through the pre embedded "GVC", and the backward embedding of GVC is good for the separate developing host countries from the bottom Division. Among the three mechanisms,Scale effect and cluster effect could not be beneficial for developing host countries to separate from the bottom of Division. The learning by doing effect and path locking effect in Inherent division of labor further lead to be fallen in the international division of labor trap.

Suggested Citation

  • Wenming Yuan, 2018. "Foreign Capital and International Division Trap," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 9(2), pages 227-235, April.
    • Handle: RePEc:jfr:ijfr11:v:9:y:2018:i:2:p:227-235
    DOI: 10.5430/ijfr.v9n2p227
    as

    Download full text from publisher

    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/13411/8283
    Download Restriction: no
    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/13411
    Download Restriction: no
    File URL: https://libkey.io/10.5430/ijfr.v9n2p227?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, vol. 104(2), pages 459-494, February.
    2. Brian J. Aitken & Ann E. Harrison, 2022. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 6, pages 139-152, World Scientific Publishing Co. Pte. Ltd..
    3. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    4. Upward, Richard & Wang, Zheng & Zheng, Jinghai, 2013. "Weighing China’s export basket: The domestic content and technology intensity of Chinese exports," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 527-543.
    5. Robert Stehrer, 2012. "Trade in Value Added and the Valued Added in Trade," wiiw Working Papers 81, The Vienna Institute for International Economic Studies, wiiw.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan Hagemejer, 2015. "Productivity spillovers in the GVC. The case of Poland and the New EU Member States," Working Papers 2015-42, Faculty of Economic Sciences, University of Warsaw.
    2. Yue Lu & Lijing Deng & Ka Zeng, 2022. "Foreign direct investment, innovation, and domestic value‐added in exports: Firm‐level evidence from China," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1199-1228, September.
    3. repec:ilo:ilowps:366690 is not listed on IDEAS
    4. Jan Fagerberg & Bengt-Åke Lundvall & Martin Srholec, 2018. "Global Value Chains, National Innovation Systems and Economic Development," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 533-556, July.
    5. Reis, Anabela & Heitor, Manuel & Amaral, Miguel & Mendonça, Joana, 2016. "Revisiting industrial policy: Lessons learned from the establishment of an automotive OEM in Portugal," Technological Forecasting and Social Change, Elsevier, vol. 113(PB), pages 195-205.
    6. Maria Cipollina & Giorgia Giovannetti & Filomena Pietrovito & Alberto F. Pozzolo, 2012. "FDI and Growth: What Cross-country Industry Data Say," The World Economy, Wiley Blackwell, vol. 35(11), pages 1599-1629, November.
    7. Ozturk, Ilhan & Kalyoncu, Huseyin, 2007. "Foreign Direct Investment and Growth: An Empirical Investigation based on Cross-Country Comparison," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(1), pages 75-81.
    8. Philipp Harms & Pierre-Guillaume Méon, 2013. "The Growth Effects of Greenfield Investment and Mergers and Acquisitions: Econometric Investigation and Implication for MENA Countries," Working Papers 794, Economic Research Forum, revised Nov 2013.
    9. Görg Holger & Marchal Léa, 2019. "Die Effekte deutscher Direktinvestitionen im Empfängerland vor dem Hintergrund des Leistungsbilanzüberschusses: Empirische Evidenz mit Mikrodaten für Frankreich," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(1), pages 53-69, June.
    10. Rueda Maurer, Maria, 2017. "Supply chain trade and technological transfer in the ASEAN+3 region," China Economic Review, Elsevier, vol. 46(C), pages 277-289.
    11. Dierk Herzer & Stephan Klasen & Felicitas Nowak-Lehmann D., 2006. "In search of FDI-led growth in developing countries," Ibero America Institute for Econ. Research (IAI) Discussion Papers 150, Ibero-America Institute for Economic Research.
    12. Hui Wang & Huifang Liu, 2017. "An Empirical Research of FDI Spillovers and Financial Development Threshold Effects in Different Regions of China," Sustainability, MDPI, vol. 9(6), pages 1-21, June.
    13. Simone Borghesi & Giorgia Giovannetti & Gianluca Iannucci & Paolo Russu, 2019. "The Dynamics of Foreign Direct Investments in Land and Pollution Accumulation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 135-154, January.
    14. Bahar, Dany & Hausmann, Ricardo & Hidalgo, Cesar A., 2014. "Neighbors and the evolution of the comparative advantage of nations: Evidence of international knowledge diffusion?," Journal of International Economics, Elsevier, vol. 92(1), pages 111-123.
    15. Ana Teresa Tavares & Aurora A. C. Teixeira, 2005. "Human Capital Intensity in Technology-Based Firms Located in Portugal: Do Foreign Multinationals Make a Difference?," FEP Working Papers 187, Universidade do Porto, Faculdade de Economia do Porto.
    16. Bastian Gawellek & Jingjing Lyu & Bernd Süssmuth, 2016. "Did Chinese Outward Activity Attenuate or Aggravate the Great Recession in Developing Countries?," CESifo Working Paper Series 5735, CESifo.
    17. Jin, Shaosheng & Guo, Haiyue & Delgado, Michael S. & Wang, H. Holly, 2017. "Benefit or damage? The productivity effects of FDI in the Chinese food industry," Food Policy, Elsevier, vol. 68(C), pages 1-9.
    18. repec:spo:wpecon:info:hdl:2441/10184 is not listed on IDEAS
    19. Thierry Mayer, 2006. "Policy Coherence for Development: A Background Paper on Foreign Direct Investment," OECD Development Centre Working Papers 253, OECD Publishing.
    20. Waldkirch, Andreas & Ofosu, Andra, 2010. "Foreign Presence, Spillovers, and Productivity: Evidence from Ghana," World Development, Elsevier, vol. 38(8), pages 1114-1126, August.
    21. Mahdi Ghodsi & Robert Stehrer, 2022. "Trade policy and global value chains: tariffs versus non-tariff measures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(3), pages 887-916, August.
    22. Piotr Ciżkowicz & Magda Ciżkowicz-Pękała & Piotr Pękała & Andrzej Rzońca, 2017. "The effects of special economic zones on employment and investment: a spatial panel modeling perspective," Journal of Economic Geography, Oxford University Press, vol. 17(3), pages 571-605.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:ijfr11:v:9:y:2018:i:2:p:227-235. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gina Perry (email available below). General contact details of provider: http://ijfr.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.