Chinese and American OFDI: The general theories of FDI

We feel that there are two catalogues of theories, suitable for developing and developed countries respectively, based on different economic development, resource endowment and ownership advantage. Many studies may focus on the experience of traditional industrialized countries. While conducting certain respect in emerging economics, it is likely to require special application of the theory. This is the case of China.

The location aspect of the mainstream or general theory, as encapsulated in Dunning’s eclectic paradigm, suggests three primary motivations (Dunning, 1977, 1993):

Foreign-market- seeking FDI;

Efficiency (cost reduction)-seeking FDI;

Resource-seeking FDI (including a subset that is known as strategic-asset-seeking FDI). That is to say, a company with OLI module (ownership advantages, internalization advantages and location advantages), can probably conduct the foreign direct investment. Among these three aspects, Dunning’s theory may give us a more systematic understanding of driving factors for MNEs’ foreign direct investment in developing countries as well as in developed countries.

Both David Ricardo’s theory of comparative advantage and Heckscher-Ohlin theory, to some extent, attempt to explain somewhat what sectors are preferred for Chinese ODI to Africa. However, as the traditional FDI theory is used to explain foreign investment from the perspective of a developed economy, in the case of the new emerging economies such as in China, we need more applications of the theories (Zhang and Daly, 2011). As far as China OFDI to Africa is concerned, China (home country) tends to support optimizing its domestic industrial structure by shifting its comparatively less efficient sectors to Africa (host country as a whole), in which those sectors are comparatively more efficient ones. At the same time, Africa may make full use of their comparative advantages of these sectors to boost their economic growth rate. However, China, in the process of optimizing their domestic industrial structure, tends to diminish their labor intensive sectors, which focus on manufacturing. In contrast, most countries in Africa seem to be in their initial economic stages, and generally in great demand for developing manufacturing. As a result, China’s ODI can make a positive contribution not only to China but also to Africa. The Theory of Small Scale Technology means that developing countries have a competitive advantage in the production of national goods and other sectors associated with Small Scale Technology (Wells, Jr., 1978). Thus China’s technology from SMEs are possibly more suitable for Africa’s economic development rather than big companies, owing to Africa is in their early economic stages demanding greatly diversified and multi-leveled market. Specifically, labor intensive sectors, which are competitive in China, can suggest a significant advantage in small scale technology in Africa (Wells, Jr., 1978).

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers, and so ensure that our papers are 100 percent original. Our Team of professionals does not miss the mark; they ensure that step by step each paper is written uniquely. We never duplicate or work as we compare papers rest assured. We deliver our work a day before time to ensure that you don’t miss your deadlines. It is not only doing the work but delivering it at the right time. We capture the consequences of late remittances. .

Money-back guarantee

We value customer satisfaction here at and make sure that you get the best value for your Money. It happens that sometimes you can pay twice for your order or may want to cancel it, or you feel that it doesn’t meet your requirements; our money back guarantee will give you the opportunity to get back your money. We will also refund 100% of money paid double. In case your paper does not satisfy your requirements , we request that you notify us via writing within 2 days otherwise on the third day we will assume that you have been satisfied. Do all your correspondences through our email address

Read more

Zero-plagiarism guarantee

At, our professional writers know the consequence plagiarism does for our clients. We have updated software’s such as article checker and copyscape to check for originality of the custom papers before submission of the final paper to the you. Our guarantee to the customer is that we will write 100% original papers for them that are quality, timely and of low cost. We have experienced professional and competent PhD writers who will write quality custom papers for you..

Read more

Free-revision policy

. At, we are proud to provide top-quality Essay writing service to our esteemed customers. We are ready to take up that challenging academic assignment that is giving you sleepless nights and simplify it for you according to your desired requirements. We are willing to revise your paper if it does not meet your requirements. At, we do not compromise with quality; thus, we offer unlimited free revisions until the customer is satisfied with their custom paper. Our unlimited free revision services are provided under the following terms:.. .

Read more

Privacy policy knows that client’s information is an essential tool for our company. It means that whatever the client requests from our service is kept strictly confidential. It means that whoever writes for this company understands the terms and conditions hence you should not be worried because you will never see your work somewhere else...

Read more

Fair-cooperation guarantee

Rest assured that we will always be attentive to your needs and requirements. We belief in the phrase treat your neighbour as you would want them to treat you. We leave nothing to chance and always look forward to a good interaction with each other.. .

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages