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Research and literature on foreign direct investment (FDI) and economic development have to date focused almost entirely on development in the host economy, sidelining the question of any contribution to development in a multinational enterprise’s country of origin. To address this shortcoming in research on FDI, this study investigates whether Chinese outward FDI can be seen as having made a contribution to the development of the mainland Chinese economy over the past three decades. It finds that the activity of Chinese enterprises in pursuing assets and advantages abroad through outward FDI yields four categories of returns: financial, capability, capacity and macroeconomic. These returns have addressed some of the specific challenges that China has faced in the process of its economic development, although the extent and importance of the development contribution remains uncertain. Outward FDI can play both a complementary and a supplementary role to development benefits realized from opening up to international trade and inward FDI, and from emigration.

Has outward foreign direct investment contributed to the development of the Chinese economy?