Foreign Investment and Development: The Positive Effects of Embedded Foreign Investment in China
This paper integrates the concept of “embeddedness” from economic sociology into the global political economy perspective in order to understand the effects of foreign investment on development. 604 foreign invested enterprises in China are used to test whether or not foreign investment that is embedded in ethnic ties leads to more positive development outcomes than those produced by investment not embedded in these institutions. The analysis concludes that foreign investment that is embedded in ethnic ties leads to greater linkages to local firms and more high-value activities being transferred to the investee nation. The article concludes by arguing for a greater integration of the economic sociology and global political economy literatures.