Strategic Management (Jan 2024)

The challenges of economic freedom and the influence on financial performance of China's development: A strategic approach

  • Milovanović Dragan,
  • Marković Nenad,
  • Vujičić-Stefanović Dragana,
  • Tešić Dejan,
  • Mekinjić Boško

DOI
https://doi.org/10.5937/StraMan2300056M
Journal volume & issue
Vol. 29, no. 1
pp. 41 – 54

Abstract

Read online

Background: As one of the world's most important economies, China has faced the problems and challenges caused by geopolitical changes, the consequences of the COVID-19 coronavirus pandemic, financial crises and other challenges in the last decade to the fullest extent. An overview of previous research studies shows the effects of partial elements of economic freedom on the financial performance of China's development. The focus of our research is on a strategic approach to the given problem, taking into account the possibility of modeling and improving the situation in response to new challenges and problems in the future. Purpose: The focus of the work is aimed at measuring the impact of economic freedoms on foreign direct investment decisions and the financial performance of China's development. Based on that, the main goal of the work is to model and determine new elements for improving the model based on a strategic approach. Study design: The research revealed that a strategic approach through the elements of economic freedom is an important factor of the model we investigated and represents the improvement of the situation and can contribute to the improvement of the financial performance of China's development. Findings: Based on the research, we obtained the result of a high degree of direct dependence and a positive correlation of the impact of economic freedom and strategic decisions on foreign direct investment on the financial performance of China's development. Economic freedoms represent a significant influencing factor and provide opportunities for the improvement of a model based on a strategic approach. Limitations: The limitations of the research refer to the unpredictable state of geopolitical changes in the world, which directly reflect on many factors of the model. Future research directions can be directed towards measuring which countries make up the largest part of China's foreign direct investments, as well as how much their influence is.

Keywords