Processing Trade, FDI and the Exports of Indigenous Firms: Firm‐Level Evidence From Technology‐Intensive Industries in China

26 Pages Posted: 22 Nov 2011

Date Written: December 2011

Abstract

This study examines the impact of processing trade‐foreign direct investment (FDI) on the export competitiveness of indigenous firms using disaggregated firm‐level production data and product‐level trade data from China covering the 2000–07 period. The estimation results show that processing trade‐FDI has generated significant positive information spillover effect on the export performance of indigenous firms. However, its technology spillovers effect on the development of international competitiveness in indigenous firms is limited and in fact exerts a significant depressive effect on the propensity to export in these firms. Indigenous innovation, economies of scale and productivity are found to be the main drivers of export performance in indigenous firms.

JEL Classification: F10, F23, F14

Suggested Citation

Fu, Xiaolan, Processing Trade, FDI and the Exports of Indigenous Firms: Firm‐Level Evidence From Technology‐Intensive Industries in China (December 2011). Oxford Bulletin of Economics and Statistics, Vol. 73, Issue 6, pp. 792-817, 2011, Available at SSRN: https://ssrn.com/abstract=1963037 or http://dx.doi.org/10.1111/j.1468-0084.2011.00673.x

Xiaolan Fu (Contact Author)

University of Oxford ( email )

3 Mansfield Road
Oxford, Oxfordshire OX1 3TB
United Kingdom

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