Are There Productivity Spillovers from Foreign Direct Investment in China?

Hale, Galina; Long, Cheryl

doi:10.2139/ssrn.1003029

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Are There Productivity Spillovers from Foreign Direct Investment in China?

FRB of San Francisco Working Paper No. 2006-13

34 Pages Posted: 26 Jul 2007

See all articles by Galina Hale

Cheryl Long

Colgate University - Economics Department

Date Written: February 2007

Abstract

We review previous literature on productivity spillovers of foreign direct investment (FDI) in China and conduct our own analysis using a firm-level data set from a World Bank survey. 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 fail to find evidence of systematic positive productivity spillovers from FDI.

Keywords: FDI, spillovers, forward-backward linkages, China

JEL Classification: L33, F23, O17

Suggested Citation: Suggested Citation

Hale, Galina and Long, Cheryl Xiaoning, Are There Productivity Spillovers from Foreign Direct Investment in China? (February 2007). FRB of San Francisco Working Paper No. 2006-13, Available at SSRN: https://ssrn.com/abstract=1003029 or http://dx.doi.org/10.2139/ssrn.1003029