Investment Liberalisation, Technology Take-Off and Export Market Entry: Does Foreign Ownership Structure Matter?

39 Pages Posted: 27 Apr 2015

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

Yundan Gong

Nottingham University Business School

Holger Görg

University of Kiel; Kiel Institute for the World Economy

Sandra Lancheros

University of Nottingham

Abstract

Before and after its accession to the WTO in 2001, China has undergone a far-reaching investment liberalisation. As part of this, existing restrictions on foreign ownership structure and mandatory export and technology transfer requirements imposed on foreign firms have been lifted in a number of industries. Against this background we identify the causal effects of foreign acquisitions on export market entry and technology take-off and evaluate whether the level of foreign ownership plays a role in stimulating these changes. Using doubly robust propensity score reweighted bivariate probit regressions to control for the selection bias associated with firm level foreign acquisition incidences, we uncover strong but heterogeneous positive effects on export activity for all types of foreign ownership structure. We also find that minority foreign owned acquisition targets experience higher likelihood of R&D, providing evidence that joint ventures can contribute positively to China's "science and technology take-off".

Keywords: investment liberalization, FDI, China, propensity score reweighting, doubly robust estimation

JEL Classification: F23

Suggested Citation

Girma, Sourafel and Gong, Yundan and Gorg, Holger and Lancheros, Sandra, Investment Liberalisation, Technology Take-Off and Export Market Entry: Does Foreign Ownership Structure Matter?. IZA Discussion Paper No. 8997. Available at SSRN: https://ssrn.com/abstract=2598937

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Yundan Gong

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham NG8 1BB
United Kingdom

Holger Gorg

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Sandra Lancheros

University of Nottingham ( email )

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