How China Grew Rich Research Paper Example | Topics and Well Written Essays - 1500 words

How China Grew Rich - Research Paper Example This is because these companies are usually export-import oriented. On this basis, the integration of foreign direct investment with the labor force of the domestic country has an effect of creating a positive development of an economy of a country1. Globalization is a factor in the emergence of this international trade, and more so after the disintegration of the Soviet Union. This is because the Soviet Union was a country that was advocating for communalism. On this note, all countries under its influence had a closed economy. However, after its disintegration, majority of the nations within the world began to create an export promotion policy. They began to open their market system for purposes of promoting free trade. In developing these policies, developing countries of the world took an example of the Asian tiger economies compromising of Taiwan, Singapore, South Korea and Hong Kong. These countries managed to improve their economies because of insisting on exports, instead of imports. This policy involved the removal of trade barriers, and encouraging direct foreign investments. On this basis, local companies within the country will participate in international trade by associating with these multi-national companies2. This export promotion strategy was successful in developing countries, and China began to experiment with it in the periods of 1970s. It is important to denote that China had one of the closest economies of the world, prior to the 1970s. The various regimes in the country regulated its economy, and they never encouraged any direct investments within the country. On this basis, their market system was closed. This made the country to be very poor, contributing to its low economic development. However, after opening up its market system to foreign companies, China was able to attract a large percentage of foreign investments and capital3. In 1990s, the country became the second largest nation to host foreign direct investments after