A study of the percentage of Taiwan’s Foreign Direct Investment (FDI) in China and export dependence to China

Abstract

Since the adoption of the cross-strait relations between mainland China and Taiwan, the economies of the said countries have grown to two of the largest in the world. However, over the years, Taiwanese businessmen shifted to increase foreign direct investments and build manufacturing plantations in China because of the vast industrial lands available, lower labor cost and overhead costs, and language similarity to Taiwan. This resulted concern for Taiwan’s own development.

In this study, issues concerning the industrial upgrading of Taiwan and increasing rates of unemployment, and export dependency to China will be analyzed. A survey questionnaire was handed to 50 respondents to determine the factors that prompt enterprises to invest overseas. The study also reviewed past literatures about the subject matter.

Results showed that Foreign Direct Investments was directly proportional to Taiwan’s GDP and balance of payments. Also, Taiwan and China have mutually beneficial import and export trade relationship. Increasing rates of unemployment may be a result from the increasing population size.

Keywords and phrases:

• Foreign Direct Investments
• cross-strait relationship
• industrial upgrading
• unemployment
• export dependency