FDI Spillovers in the Chinese Manufacturing Sector: Evidence of Firm Heterogeneity

47 Pages Posted: 6 Jun 2008

See all articles by Filip Abraham

Filip Abraham

KU Leuven - Department of Economics

Jozef Konings

Catholic University of Leuven (KUL) - LICOS - Centrum voor Transitie-economie; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Veerle Miranda

OECD

Abstract

We use a new longitudinal data set of more than 15,000 Chinese manufacturing plants to show that the direct and indirect effects of foreign direct investment on measured firm level productivity depend on a number of firm specific features and institutional factors. We find that domestic firms engaged in a joint-venture with a foreign partner are on average more productive, as well as exporting plants and plants located in special economic zones. In addition, domestic firms benefit from horizontal spillovers from foreign firms on average. However, these spillovers depend on the structure and origin of ownership as well as on specific characteristics of the special economic zones. First, spillovers are less likely to occur from fully foreign owned firms than from joint-ventures. Second, spillovers from foreign direct investment originating from oversees Chinese (Hong Kong, Macau and Taiwan) are stronger than from the rest of the world. Third, spillovers are higher in the special economic zone aimed at attracting foreign capital to fasten the development of China's own high tech industries.

Keywords: China, firm heterogeneity, Productivity, Spillovers

JEL Classification: F21, L2

Suggested Citation

Abraham, Filip and Konings, Jozef and Miranda, Veerle, FDI Spillovers in the Chinese Manufacturing Sector: Evidence of Firm Heterogeneity. CEPR Discussion Paper No. DP6573, Available at SSRN: https://ssrn.com/abstract=1140100

Filip Abraham (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

Jozef Konings

Catholic University of Leuven (KUL) - LICOS - Centrum voor Transitie-economie ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium
+32 16 326 589 (Phone)
+32 16 326 599 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Veerle Miranda

OECD ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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