In the mid-2000s, Kawasaki, Siemens and other European and
Japanese companies began producing high-speed trains in China.
They now have competition from domestic companies, such as China
South Locomotive & Rolling Stock Corp. (CSR), that manufacture
trains with speeds of up to 236 miles per hour.1 By their own
admission, the domestic firms learned from the technology and
techniques of their foreign counterparts. This kind of
technology transfer is the reason many developing countries are
encouraged to attract foreign direct investment (FDI) as a means
of advancing their own domestic industries.(a) The theory is
that the technology, knowledge, and techniques brought in by
experienced foreign investors and managers will spill over to
locally-owned firms. FDI and other forms of international
investment were thought to play a role, for example, in the
rapid economic growth of the Asian Tigers (Singapore, South
Korea, Hong Kong, and Taiwan) from the 1960s to the 1990s.(b) In
the 1990s, FDI was the biggest source o