How Does the Productivity of Foreign Direct Investment Spill Over to Local Firms in Chinese Manufacturing?

28 Pages Posted: 12 Aug 2009

See all articles by Adam Blake

Adam Blake

Bournemouth University; CREDIT

Ziliang Deng

Keele University

Rod Falvey

Bond University - Department of Economics

Date Written: February 1, 2009

Abstract

We use a firm-level dataset for Chinese manufacturing, to estimate productivity spillovers from foreign direct investment (FDI) to local firms. The spillover channels considered include inter-firm labour turnover/mobility; vertical input-output linkages; exporting externalities; and horizontal effects. The roles of these channels are dependent on various factors including export propensity, R&D expenditure per capita, employee training, and ownership structure. We find that export of MNEs is the most prominent spillover channel. Labour turnover and horizontal demonstration and competition bring positive spillovers to SOEs but not to local private firms. Vertical linkages are not found to be significant.

Keywords: productivity spillover, foreign direct investment (FDI), labour mobility/turnover, linkages, export

JEL Classification: O33, F23, J63, L14, F14

Suggested Citation

Blake, Adam and Deng, Ziliang and Falvey, Rod, How Does the Productivity of Foreign Direct Investment Spill Over to Local Firms in Chinese Manufacturing? (February 1, 2009). Available at SSRN: https://ssrn.com/abstract=1446703 or http://dx.doi.org/10.2139/ssrn.1446703

Adam Blake

Bournemouth University ( email )

Fern Barrow
Poole BH12 5BB, Dorset BH8 8EB
United Kingdom

CREDIT

School of Economics
Nottingham, NG7 2RD
United Kingdom

Ziliang Deng

Keele University ( email )

Keele, Staffordshire ST5 5BG
United Kingdom

Rod Falvey (Contact Author)

Bond University - Department of Economics ( email )

Bond University - Department of Economics
Gold Coast, Queensland 4229
Australia

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