FDI In Service And China's Opening Strategy Of Service Sector

With the internationalization of service industry, FDI in service has been a universal phenomenon. Developed countries as well as developing countries' direct investment with no exception shift toward service industry. In 21st century, the industrial distribution of FDI in service has changed a lot, for FDI in service has shifted from finance and insurance to such highly-monopoly industries as water, electricity and telecommunications, and professional business services also become a hotspot in attracting FDI. Faced with changed distribution of FDI in service, China should act actively to formulate industry strategies to open its related service industries.The thesis consists of six chapters. The introduction puts forward the research subject, the new ideas and shortcomings of the thesis as well as framework of it. The first chapter describes the characteristics of service industry, the internationalization process of service industry and the new features in the development of FDI in service. The second chapter is the literature review of FDI in service from developed as well as developing country's perspective, and new theoretical development in FDI in service is also mentioned in this chapter. The third chapter analyzes economic effects the FDI in service has on the developing host countries, and the economic effects include capital formation and economic growth, industrial structure evolution, spillover and crowding out as well as risk ones. In the fourth chapter, an empirical test is done on the causality between FDI in service and economic growth in China and the conclusion is that FDI in service is the reason for economic growth, however, the latter is not the reason for the former. On the other hand, FDI in service has a little effect on the structural transformation of industries in the service sector of China. Other economic effects of FDI in service on China are also covered in detail. Since chapter 3 and chapter 4 provide the theoretical and empirical foundation for the opening of service industry to the outside world, so which service industries should China open? In chapter 5, two countries in developed countries and two in developing countries are chosen to find out their industrial distribution of FDI in service in the past decade. After analysis, the highly-monopoly service industries as water, electricity and telecommunications, finance and insurance as well as professional business services have been the focus of these countries' direct investment in service. In the sixth chapter, the thesis provides some suggestions on the strategies of opening the above-mentioned service industries.