Assessing the Impact of China's WTO Accession on Investment

25 Pages Posted: 21 Sep 2006

See all articles by Terrie Louise Walmsley

Terrie Louise Walmsley

Purdue University - Center for Global Trade Analysis

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Elena Ianchovichina

World Bank

Abstract

After a boom in foreign direct investment (FDI) in China in the early 1990s, FDI slowed in the late 1990s. More recently, with China's accession to the World Trade Organization (WTO) a reality, FDI has once again picked up. This paper explores the linkage between WTO accession and investment in China. We find that investment and capital stocks increase substantially. Moreover, foreign ownership of Chinese assets doubles by 2020. Central to this increase is the expected catch-up in the productivity of the services sectors driven by reforms. These estimates are far larger than those predicted by earlier studies, which ignored the reforms affecting Chinese services sectors, and abstracted from international capital mobility.

Suggested Citation

Walmsley, Terrie Louise and Hertel, Thomas W. and Ianchovichina, Elena, Assessing the Impact of China's WTO Accession on Investment. Pacific Economic Review, Vol. 11, No. 3, pp. 315-339, October 2006. Available at SSRN: https://ssrn.com/abstract=931752 or http://dx.doi.org/10.1111/j.1468-0106.2006.00318.x

Terrie Louise Walmsley (Contact Author)

Purdue University - Center for Global Trade Analysis ( email )

1145 Krannert Building
West Lafayette, IN 47907
United States

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis ( email )

Department of Agricultural Economics
1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4199 (Phone)
765-494-9176 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

Elena Ianchovichina

World Bank ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-458-8910 (Phone)
202-522-1159 (Fax)

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