German Foreign Direct Investments in China Coursework - 3

German Foreign Direct Investments in China - Coursework Example Majority of the studies have revealed that there is more benefit coming from FDI to both the host and the home country compared to the risks generated. It is noted that in FDI, a rational firm commits itself to invest in another firm or a different locality if only it is anticipating a viable profit that is to come from the operation (Dunning 1980, p. 9-31). Â  From the various sources, clear indications have been shown to support that there is an increase in foreign direct investment (FDI) in China. This is not surprising at all in regard to the huge market size and the opportunities for exploitation of resources in existence. In addition, the policies of open market China has been pursuing over the last twenty years and the efforts that have been converted to attract FDI has acted as a springboard to the growth of FDI, and the ultimate interest in the scientific analysis. The continuous development of China’s economic development largely does depend on the extent of policy-making and FDI that will help in facilitating inward investment. Moreover, foreign development and investment f specific industrial sector are seen as an essential way to establish the superstructure and the infrastructure of today’s economy of the market (Chang & Rosenzweig 2001, p. 747-776). Â  For several years, the model of OLI has been a significant framework min analyzing the multinational enterprise's activities as well as the economic rationale that takes place in the international operations. This model is also known as the eclectic model, and it was first postulated in the year 1976 after having been proposed by J. H. Dunning.