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Multinationals and the creation of Chinese trade linkages

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  • Deborah L. Swenson

Abstract

This paper studies the relationship between multinational firm proximity and the formation of new export connections by private Chinese exporters between 1997 and 2003. The results indicate that growth in the presence of multinational firms is positively associated with the formation of new trade by local Chinese firms. Further exploration suggests that information spillovers may drive this result, as the positive association due to own-industry multinational presence is particularly strong in contexts where information improvements may be the most helpful. Thus, it appears that a growing presence of multinational firms may enhance the export capabilities of local domestic firms.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 41 (2008)
Issue (Month): 2 (May)
Pages: 596-618

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Handle: RePEc:cje:issued:v:41:y:2008:i:2:p:596-618

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References

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  1. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," CEPR Discussion Papers 1365, C.E.P.R. Discussion Papers.
  2. Feenstra, Robert & Hiau Looi Kee, 2004. "Export variety and country productivity," Policy Research Working Paper Series 3412, The World Bank.
  3. Robert C. Feenstra & Gordon H. Hanson, 2004. "Ownership and Control in Outsourcing to China: Estimating the Property-Rights Theory of the Firm," NBER Working Papers 10198, National Bureau of Economic Research, Inc.
  4. Stephen R. Yeaple & Wolfgang Keller, 2003. "Multinational Enterprises, International Trade, and Productivity Growth," IMF Working Papers 03/248, International Monetary Fund.
  5. Beata K. Smarzynska, 2003. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages," William Davidson Institute Working Papers Series 548, William Davidson Institute at the University of Michigan.
  6. International Monetary Fund, 2005. "Trade Costs and Location of Foreign Firms in China," IMF Working Papers 05/55, International Monetary Fund.
  7. James E. Rauch & Joel Watson, 1999. "Starting Small in an Unfamiliar Environment," Cowles Foundation Discussion Papers 1218, Cowles Foundation for Research in Economics, Yale University.
  8. Robert C. Feenstra & Andrew K. Rose, . "Putting Things In Order: Patterns Of Trade Dynamics And Growth," Department of Economics 97-14, California Davis - Department of Economics.
  9. Besedes, Tibor & Prusa, Thomas J., 2006. "Product differentiation and duration of US import trade," Journal of International Economics, Elsevier, vol. 70(2), pages 339-358, December.
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  12. Richard Kneller & Mauro Pisu, 2007. "Industrial Linkages and Export Spillovers from FDI," The World Economy, Wiley Blackwell, vol. 30(1), pages 105-134, 01.
  13. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
  14. Cheng, Leonard K. & Kwan, Yum K., 2000. "What are the determinants of the location of foreign direct investment? The Chinese experience," Journal of International Economics, Elsevier, vol. 51(2), pages 379-400, August.
  15. Frances Ruane & Julie Sutherland, 2005. "Foreign Direct Investment and Export Spillovers: How Do Export Platforms Fare?," The Institute for International Integration Studies Discussion Paper Series iiisdp058, IIIS.
  16. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," Working Papers 452, Queen Mary, University of London, School of Economics and Finance.
  17. Aitken, Brian & Hanson, Gordon H. & Harrison, Ann E., 1997. "Spillovers, foreign investment, and export behavior," Journal of International Economics, Elsevier, vol. 43(1-2), pages 103-132, August.
  18. Irene Brambilla, 2006. "Multinationals, Technology, and the Introduction of Varieties of Goods," NBER Working Papers 12217, National Bureau of Economic Research, Inc.
  19. Holger Görg & David Greenaway, 2004. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Bank Research Observer, World Bank Group, vol. 19(2), pages 171-197.
  20. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
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  22. James E. Rauch & Vitor Trindade, 2003. "Information, International Substitutability, and Globalization," American Economic Review, American Economic Association, vol. 93(3), pages 775-791, June.
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Citations

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Cited by:
  1. Harding, Torfinn & Smarzynska-Javorcik, Beata, 2009. "A Touch of Sophistication: FDI and Unit Values of Exports," CEPR Discussion Papers 7596, C.E.P.R. Discussion Papers.
  2. Horst Raff & Natalia Trofimenko, 2013. "World Market Access of Emerging-Market Firms: the Role of Foreign Ownership and Access to External Finance," Kiel Working Papers 1848, Kiel Institute for the World Economy.
  3. Chung, Yessica C.Y., 2012. "Ethnic Networks and Technical Knowledge Learning in Industrial Clusters," Working Papers 37, JICA Research Institute.
  4. Annette SCHMINKE & Johannes VAN BIESEBROECK, 2011. "Using export market performance to evaluate regional preferential policies in China," Center for Economic Studies - Discussion papers ces11.33, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  5. Poncet, Sandra & de Waldemar, Felipe Starosta, 2013. "Product relatedness and firm exports in China," Policy Research Working Paper Series 6676, The World Bank.
  6. Florian MAYNERIS & Sandra PONCET, 2011. "Export performance of Chinese domestic firms: the role of foreign export spillovers," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  7. Mayneris, Florian & Poncet, Sandra, 2013. "Chinese firms'entry to export markets : the role of foreign export spillovers," Policy Research Working Paper Series 6398, The World Bank.
  8. ITO Banri & XU Zhaoyuan & YASHIRO Naomitsu, 2013. "Does Agglomeration Promote the Internationalization of Chinese Firms?," Discussion papers 13081, Research Institute of Economy, Trade and Industry (RIETI).
  9. Fukunari Kimura & Ayako Obashi, 2011. "Production Networks in East Asia : What We Know So Far," Microeconomics Working Papers 23216, East Asian Bureau of Economic Research.
  10. Patrik Karpaty & Richard Kneller, 2011. "Demonstration or congestion? Export spillovers in Sweden," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 147(1), pages 109-130, April.
  11. Torfinn Harding & Beata Javorcik, 2011. "FDI and Export Upgrading," Economics Series Working Papers 526, University of Oxford, Department of Economics.
  12. Iwasaki, Ichiro & Csizmadia, Péter & Illéssy, Miklós & Makó, Csaba & Miklós Szanyi, 2010. "Foreign Direct Investment, Information Spillover, and Export Decision : The Concentric-Circle Model with Application to Hungarian Firm-Level Data," Discussion Paper Series a527, Institute of Economic Research, Hitotsubashi University.

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