Foreign Direct Investment (FDI) hasplayed a significant and positive role in driving economicgrowth and upgrading economic structure in Shanghai. Theshift in the pattern of FDI over the last decade towardsservices has been particularly crucial. Given itsimportance, Shanghai municipal government may continue todevote efforts to attract FDI and have foreign fundedenterprises help reshape Shanghai's economic landscape.The main importance of FDI to Shanghai lies less in itscapital finance, and more in the extent to which foreignfunded enterprises (FFEs) help move the city up the valuechain and generate high-end jobs. In the post-financialcrisis era, developing countries will take a much largerrole in leading world growth while enhanced competition willaccelerate the pace of service revolution. Possessing stronggeographic advantages, Shanghai has the potential to becomean international business and financial hub and to have thehigh-tech industries and services being the driving force ofthe growth. Shanghai has strong potential in reaping thebenefits of FDI and reshaping its economic landscape in 12thFive Year Plan period. In terms of the three conditions tosucceed good opportunity, favorable geographic location andharmonious society, Shanghai is already in a good position.This note seeks to provide insights to help the Shanghaigovernment make the right decisions and trade-offs to betterreap the benefits of FDI in the context of a changing global context.
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