China's economic development is often heavily attributed to direct foreign direct investment (FDI) during the late 70's through 90's.

Is FDI absolutely necessary for a country to grow its industry?

If a country doesn't have plenty of natural resources like gulf countries or Russia, can that country grow its economy at a substantial pace FDI?

I know that it is a very important component of an economy. But, is it the only way for a country's economy to grow?


2 Answers 2


No, foreign investment is not necessary for an economy to grow. Consider the world as a whole: it has never had any outside investment that we know of, but its economy has grown massively over the past few thousand years.

China's economy was able to grow faster because of outside investment. Notably, production lines in use in other countries were moved to China to take advantage of the lower labour costs.


Is it possible for a country to grow its economy without foreign investment?

Absolutely YES!

The Soviet Union developed at an incredible pace prior to 1953 without FDI. As did China prior to 1976.


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