Reaping Benefits of FDI and Reshaping Shanghai's Economic Landscape

Foreign Direct Investment (FDI) has
played a significant and positive role in driving economic
growth and upgrading economic structure in Shanghai. The
shift in the pattern of FDI over the last decade towards
services has been particularly crucial. Given its
importance, Shanghai municipal government may continue to
devote efforts to attract FDI and have foreign funded
enterprises help reshape Shanghai's economic landscape.
The main importance of FDI to Shanghai lies less in its
capital finance, and more in the extent to which foreign
funded enterprises (FFEs) help move the city up the value
chain and generate high-end jobs. In the post-financial
crisis era, developing countries will take a much larger
role in leading world growth while enhanced competition will
accelerate the pace of service revolution. Possessing strong
geographic advantages, Shanghai has the potential to become
an international business and financial hub and to have the
high-tech industries and services being the driving force of
the growth. Shanghai has strong potential in reaping the
benefits of FDI and reshaping its economic landscape in 12th
Five Year Plan period. In terms of the three conditions to
succeed good opportunity, favorable geographic location and
harmonious society, Shanghai is already in a good position.
This note seeks to provide insights to help the Shanghai
government make the right decisions and trade-offs to better
reap the benefits of FDI in the context of a changing global context.