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This book is a systematic investigation of the role of direct foreign investment (DFI) in the economic development of China during the post-1978 period. It provides not only an in-depth investigation of issues covered by previous studies (such as the impact of DFI on domestic capital formation, exports and economic growth), it also explores issues such as the industrial linkage effects of DFI, comparative analysis of the production characteristics of foreign-invested enterprises (FEIs) and domestic firms, DFI's impact on regional economic disparity and income inequality, entry modes of multinational corporations (MNCs) and their transfer pricing activities. As an economy undergoing transition from a socialist planning system to a market economy, China's experience in economic development using direct foreign investment has important implications for both developing and transitional economies. These include implications for economic development strategies, the policy orientation of industrialization, policies on DFI, foreign trade, and regional development, taxation and tariff policies and the impact of domestic markets to foreign investment and trade.