Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10491182 | Business Horizons | 2005 | 6 Pages |
Abstract
It is widely believed that countries with a poor governance environment (e.g., weak laws and rampant corruption) do not attract foreign direct investment (FDI); however, our study suggests otherwise. Using China as a case study, this article argues that the prevailing theory that a good governance environment begets FDI is incomplete. When faced with a poor governance environment, investors choose direct investment over indirect (portfolio) investment because the former can be better protected by private means. In fact, China attracts a large amount of FDI because of, rather than despite, its lack of a good governance environment. In conclusion, this article offers strategies to better protect investments and to chart through the pitfalls resulting from rapid changes in the governance environment.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Shaomin Li,