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FDI and the processing trade in China: based on vertical specialization

Abstract:

This chapter examines the hypothesis that FIEs engaged in international fragmentation of their production experience a greater balance of processing trade; data used: FDI stock and balance of processing trade 1982–2010. The results show that FDI stock has certainly played a pivotal role in the continuing dynamism of the processing trade and an increased inter-linkage between international production fragmentation and FDI absorption.

Key words

FDI

Processing trade

Vertical specialization

Introduction

With the advent of globalization, the traditional form and nature of China’s foreign trade has undergone profound changes in recent decades. One of the most ...

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