Sample MSC Accounting and Financial Management Dissertation Proposal

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It is Analysing the Factors of Effecting FDI in China and How it Impacts the Country’s Economic Development.

Aim and Objectives

The study’s primary aim is to determine significant factors that affect FDI in China and the impact on the country’s economic development. This aim is to be achieved through the following objectives;

The conceptualisation of Foreign Direct Investment (FDI)

 To understand FDI policies in China, including FDI forms and the evolution of FDI policies in China.

 To determine factors affecting FDI in China.

 To depict how FDI has affected economic growth in China.

 To provide recommendations based on the findings of the study

Theoretical basis

According to Amiti and Javorcik (2008, p.131), there have been remarkable
Chinese economy changes over the recent 30 years as Open-up and Reform Policy
was announced in 1978. This was the year after which the Chinese economy is
continually growing at a fast pace and have opened markets to international
investment and has achieved success in attracting FDI in the past 30 years. It was
almost negligible until 1978 and increased to $95 billion in 2008 when around
434,937 international corporations got registered in China. The impact of FDI on the
economy is remarkable; in Shenzhen, first MacDonald’s was established in 1990,
after which around 1000 restaurants were opened within 20 years. Apart from this,
other examples are dominant positions of Apple, Nokia and Motorola in the cellular
phone market, Pepsi, Coca Cola, in the soft drink market. Further, most popular
three supermarkets are also foreign Walmart, Metro and Carrefour. The growth of
these companies within the Chinese market is proof that China is an economy worth
investing in, and several factors help investors get higher returns on their investment
in China. Fan et al. (2009, p.858), stated that the factors include fast growth of the
economy, large population, government incentives, membership of World Trade Organization, attractive return and low labour cost. These factors are an attraction for foreign investors to invest in China rather than any other country.

According to Agrawal and Khan (2011, p.71), market size is the most
important factor that affects an investor’s decision to invest in a market. Growth of
the Chinese market is a major plus point on why investors are willing to invest in the
market; they are getting high returns as their businesses are being successful in the
market. This factor is somehow associated with another factor large population.
Growth of international firms in China is also due to a large population that needs
more and more products and varieties to be consumed daily. Market growth is
related to the population within the country because consumers are the reason for
the growth of a market. Tang and Selvanathan (2008, p.1298), stated that in a
market where the population is large, more consumers consume products and
services, providing more revenue to the company. Multinational corporations around
the world are continuously in search of growing economies where they can expand
their operations are benefiting from a growing economy.
Additionally, multinational corporations are a major source of FDI inflow. In
China, there is a number of Multinational Organisations operating successfully.
These organisations’ success proves that the market is growing rapidly, and
organisations are finding the Chinese market as an attraction for investment. FDI
inflow in china is resource seeking because there is the availability of cheap labour,
FDI inflow and wage rate have a negative relationship because multinational
corporations look for cheap labour to reduce their sales cost. However, the impact of
wage rate on FDI flow is dependent over labour skills. It is studied by Fu (2008,
p.92), that more skilled labour force attracts more FDI in a country and shows the
positive effect of labour cost on FDI inflow. Yu and Walsh (2010), stated that Labour
and material cost is the major cost an organisation incurs. Therefore, the most
important concern for multinational organisations is the cost of material and labour
according to which investment decision is made.
Furthermore, China’s membership with the World Trade Organization (WTO),
provides great opportunities to the country and therefore, corporations around the
world get attracted to such opportunities. Members of WTO enjoy significant
economic terms because it regulates trade among countries around the world as it
Dissertation Proposal 5
stimulates economic growth through trade. Rosen and Hanemann (2009), stated that
China is a WTO member, and this membership attracts multinational organisations
to invest in China because of better trade opportunities and growth. Governments of
WTO member states are shielded from lobbying and provide greater incentives for
traders and service providers. These incentives are also a factor to influence FDI
inflow in China; corporations look for these incentives because these incentives help
them a lot while in other countries they face restrictions, barriers and policies for
multinational organisations to limit their operations in the country. However, the
Chinese economy and Government encourage investors to invest in their country
with a vision to grow.

 

 

 

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Furthermore, in China, foreign enterprises get greater returns on their investments. This may be due to the large population, which makes it difficult for local corporations to fulfil their demands.

A good return is the major purpose of investors to invest either locally or internationally; every investor will get attracted to the country or market where it sees an opportunity of higher returns. China is a growing country providing great opportunities for greater returns and growth to all businesses.

Moving forward to the relationship and impact of FDI on economic growth in China, it was found by Liang (2008), that FDI has positively impacted the economic growth of China in Past.

However, Whalley and Xian (2010, p.128), stated that after the financial crisis of 2007-08, FDI policies had been changed and its impact may have resulted in different relationships between FDI and economic growth.

AzmanSaini and Ahmad (2010, p.212) also stated that FDI is directly related to China’s economic growth because there are factors motivating investors to invest more in China.

Further, many studies, including the study of Kok and Acikgoz Ersoy (2009, p.110) have studied the impact of FDI on developing countries’ economic growth. It was found that it positively affects economic growth or development of a country.

This research is subject to determine major factors to influence FDI in China and how FDI affects China’s economic growth. The research will be conducted considering all major factors important in the Chinese economy due to which FDI inflow is affected.

Research methodology

For this research, secondary data will be used through research and articles
about the Chinese economy and FDI in China and the relationship between both.

Secondary data will help the researcher to extract data and information about
Chinese FDI and economic growth.

According to Saunders (2011), secondary data is
the data that has been extracted in the past and used in the past by previous
researchers and will now be included in current research to include its findings and
interpretations to reach a conclusion and provide recommendations accordingly.

Multiple research will be studied, and results will be included to analyse all
research’s core idea.

These findings will then be analysed using content analysis
which extracts the meaning within literature (Mackey and Gass, 2015).

The method
is said to be qualitative because results will not be numeric but in the form of
opinions of these researchers after their research (Bryman and Bell, 2015).

Secondary data will be extracted from genuine and reliable sources. There is no
inaccurate information regarding FDI in China, factors affecting FDI in China and
economic growth affected by FDI in China.

The researcher will follow a few ethical
guidelines to make the study more reliable, such as avoiding plagiarism and giving
credit to the researchers, authors or analysts for their work included in the study.

The researcher has used his professional judgment and objectivity while deciding for
research methods so that the research method suits the study’s topic.

Research plan

In this section, the research’s practical feasibility has been included with the timetable for each activity including proposal, literature review, methodology and analysis. The research plan will be followed strictly so that there is no delay in the
completion of this dissertation.

Proposal of the dissertation has been completed on
the 28th of May, 2018 which will be followed by completion of literature review of the
study including various past studies associated with FDI in China, factors affecting
FDI in China and impact of FDI in the economic growth of China, this literature will
be completed by the end of June 2018.

Completion of the literature review will be
followed by the methodology and interpretation of results by the end of July 2018.
The methodology will include detailed methods followed for the dissertation which researcher thinks appropriate and suitable for the topic.

At the same time, analysis of results will extract final results provided by all the studies included in literature.

Following is the table showing dates for all the work to be done;

Time Table

Place Table here

References

Agrawal, G. and Khan, M.A., 2011. Impact of FDI on GDP: A comparative study of
China and India. International Journal of Business and Management, 6(10), p.71.

Amiti, M. and Javorcik, B.S., 2008. Trade costs and location of foreign firms in
China. Journal of development economics, 85(1-2), pp.129-149.

Azman-Saini, W.N.W., Law, S.H. and Ahmad, A.H., 2010. FDI and economic growth:
New evidence on the role of financial markets. Economics Letters, 107(2), pp.211-213.

Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press,
USA.

Fan, J.P., Morck, R., Xu, L.C. and Yeung, B., 2009. Institutions and foreign direct
investment: China versus the rest of the world. World development, 37(4),
pp.852-865.

Fu, X., 2008. Foreign direct investment, absorptive capacity and regional innovation
capabilities: evidence from China. Oxford Development Studies, 36(1), pp.89-
110.

Kok, R. and Acikgoz Ersoy, B., 2009. Analyses of FDI determinants in developing
countries. International Journal of Social Economics, 36(1/2), pp.105-123.

Liang, F.H., 2008. Does foreign direct investment harm the host country’s
environment? Evidence from China.

Mackey, A. and Gass, S.M., 2015. Second language research: Methodology and
design. Routledge.

Rosen, D.H. and Hanemann, T., 2009. China’s changing outbound foreign direct
investment profile: drivers and policy implications (No. PB09-14). Washington,

DC: Peterson Institute for International Economics.

Saunders, M.N., 2011. Research methods for business students, 5/e. Pearson Education India.

Tang, S., Selvanathan, E.A. and Selvanathan, S., 2008. Foreign direct investment, domestic investment and economic growth in China: A time series analysis. The World Economy, 31(10), pp.1292-1309.

Whalley, J. and Xian, X., 2010. China’s FDI and non-FDI economies and the sustainability of future high Chinese growth. China Economic Review, 21(1), pp.123-135.

Yu, J. and Walsh, M.J.P., 2010. Determinants of foreign direct investment: A sectoral
and institutional approach (No. 10-187). International Monetary Fund.