Only find the impact on the host country (taking my country as an example)
1. The positive effect of using foreign capital on the economic development of the host country
(1) Economic development microscopic effects.
Absorbing and utilizing foreign capital will help make up for the shortage of domestic construction funds and promote investment growth.
(2) The macro effect of using foreign capital on my country’s economic development
The impact of using foreign capital on domestic macroeconomic policies is generally positive: it promotes economic growth and, to a certain extent, It has alleviated our employment pressure to a certain extent. It also has some impact on monetary policy and foreign exchange policy. These adverse effects can be avoided and mitigated as long as they are dealt with appropriately.
In the 1980s, the proportion of foreign direct investment in GDP was still less than 1. After the 1990s, the proportion of foreign direct investment in GDP increased rapidly. It had reached 6.5 in 1994. With the development of my country's economy, the scale of utilizing foreign capital is constantly expanding, and the role of foreign investment is also gradually increasing.
The proportion of the output value of foreign-invested enterprises in the manufacturing industry to the national total industrial output value has increased year by year. In 1990, it only accounted for 4.38%, and by 1994 it accounted for 13.55%. In terms of development speed, in the four years from 1990 to 1994, the growth rate of the country's total industrial output value was 3.21 times, while the growth rate of the output value of foreign-invested enterprises was nearly 10 times. The growth of foreign-invested enterprises has promoted the growth of the domestic industrial economy. effect.
2. The negative impact of the use of foreign capital on
(1) Foreign capital monopoly
Foreign capital has formed a negative impact on certain departments and industries in our country through mergers, acquisitions and holdings. The de facto monopoly has caused our country to lose or is losing economic control over these sectors and industries. For example, in my country's beverage market, "Coca-Cola" and "Pepsi-Cola" have occupied most of the carbonated beverage market share; the detergent industry is also controlled in various ways by companies from the United States, Germany and the United Kingdom; 14 companies in the pharmaceutical industry Among large enterprises, 13 are controlled by foreign parties, and there are many more industries like this.
Some large state-owned enterprises are also controlled by foreign investors, such as the Shanghai People's Machinery Factory, the largest printing machinery factory in the country, and the Harbin Bearing Factory, the largest bearing factory in my country, which have been controlled by foreign investors. There are also some industries such as automobiles. Even if the Chinese side has a controlling stake, the foreign side has the key technology, so the foreign capital has actual controlling stake. From the above situation, the security of some of my country's industries is under threat from foreign-funded enterprises.
(2) Market carving up
Foreign-funded enterprises use famous brand strategy and low-price dumping to capture the Chinese market and seize market share. Some products and their markets with relatively high technological content in our country have been discontinued one after another due to competition with foreign acquisitions and imported products. For example, Motorola, Ericsson, and Nokia in the communications market have almost divided up my country's wireless communications product market. Fortunately, we can still see hope for the recovery of some national mobile phone brands. In the color film market, under the impact of Japan's Fujifilm, the United States' Kodak, and Germany's Agfa, only Lucky is struggling to support domestic brands. The large-scale entry of foreign brands has carved up a considerable market share in our country, and has caused a certain degree of excessive competition among domestic companies in the domestic market.
(3) Industrial structure imbalance
The influx of large amounts of foreign investment has also had a certain impact on the optimization of my country's industrial structure and product upgrading. On the one hand, it makes the already unreasonable industrial structure worse; on the other hand, it makes some of our strong industries lose their advantages. From the perspective of foreign investment, most of them invest in general processing industries and labor-intensive industries, which intensifies the competition for the use of my country's energy, raw materials and public facilities, causing a certain degree of tension. From the perspective of regional investment, foreign investment is mainly concentrated in the eastern coastal areas, with a smaller proportion of investment in the central and western regions. It has further deteriorated the regional structure of my country's industrial distribution and the overall economic pattern, widening the gap between the eastern and central and western regions.
(4) Operational fraud
Foreign businessmen embezzle my country’s state-owned assets in various ways during the process of joint ventures and cooperation with Chinese enterprises.
The main manifestations are as follows: (1) In a joint venture with the Chinese party, the Chinese party's assets are underestimated or even not valued, shares are purchased based on the net book value, and intangible assets such as trademarks, patents, and goodwill are not valued. (2) The price of imported equipment was intentionally raised, causing our country to suffer losses. (3) Over-reporting investment funds and under-investment, withdrawing funds and other means to fake joint ventures. (4) Transfer pricing and evasion of taxes and fees. (5) Acquire and annex famous Chinese brands and trademarks and then abandon them.