Is There Evidence of FDI Spillover on Chinese Firms' Productivity and Innovation?
37 Pages Posted: 20 Apr 2006
Date Written: January 2007
Abstract
We review previous literature on productivity spillovers of foreign direct investment (FDI) in China and conduct our own analysis using a cross--section of firm data. We find that the evidence of FDI spillovers on the productivity of Chinese domestic firms is mixed, with many positive results largely due to aggregation bias or failure to control for endogeneity of FDI. Attempting over 2500 specifications which take into account forward and backward linkages, we find no evidence of systematic positive productivity spillovers from FDI. We do, however, find robust evidence that Chinese private firms tend to invest less in innovation in the presence of FDI. Combined with our previous findings that domestic private firms tend to be more involved in providing inputs and intermediary goods for foreign firms (Hale and Long, 2006), these results suggest a more passive role played by domestic firms in the global division of labor than envisioned by the Chinese government.
Keywords: FDI spillovers, institutions, SOE, privatization, China
JEL Classification: L33, F23, O17
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela and the United States
By Brian Aitken, Ann E. Harrison, ...
-
Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?
By Jonathan Haskel, Sonia C. Pereira, ...
-
Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?
By Jonathan Haskel, Sonia C. Pereira, ...
-
Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?
By Jonathan Haskel, Sonia C. Pereira, ...
-
Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?
By Holger Görg and David Greenaway
-
Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Investment?
By Holger Görg and David Greenaway
-
Foreign Direct Investment as a Catalyst for Industrial Development
-
Foreign Investment and Productivity Growth in Czech Enterprises
By Bernard Hoekman and Simeon Djankov
-
Technology Transfer and Spillovers? Does Local Participation with Multinationals Matter?
By Magnus Blomstrom and Fredrik Sjoholm