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Are FDI spillovers regional? Firm-level evidence from China

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  • Xu, Xinpeng
  • Sheng, Yu
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Abstract

This paper examines whether spillovers from FDI occur at the national or regional level, using firm-level census data for the Chinese manufacturing industry between 2000 and 2003. We find that FDI provides significant positive spillovers for the productivity of firms in the same industry, but these spillovers are likely to be regional; that is, domestic firms benefit more from the presence of foreign firms in the same sector within the same region. The backward and forward linkage effects of FDI are negative with significant regional disparity. The geographic distribution of FDI also influences spillovers, with an increase in FDI inflow to the top FDI recipient provinces increasing the forward linkage spillovers. Our empirical results also suggest that domestic firms differ significantly in the extent to which they benefit from FDI, though domestic firms with high absorptive capacity are more likely to benefit from FDI.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 23 (2012)
Issue (Month): 3 ()
Pages: 244-258

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Handle: RePEc:eee:asieco:v:23:y:2012:i:3:p:244-258

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Web page: http://www.elsevier.com/locate/asieco

Related research

Keywords: Foreign direct investment; Spillover effects; China;

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References

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  1. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  2. Fleisher, Belton M. & Li, Haizheng & Zhao, Min Qiang, 2008. "Human Capital, Economic Growth, and Regional Inequality in China," IZA Discussion Papers 3576, Institute for the Study of Labor (IZA).
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  12. Albert G. Z. Hu & Gary H. Jefferson, 2002. "FDI Impact and Spillover: Evidence from China's Electronic and Textile Industries," The World Economy, Wiley Blackwell, vol. 25(8), pages 1063-1076, 08.
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Citations

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Cited by:
  1. Petri, Peter A., 2012. "The determinants of bilateral FDI: Is Asia different?," Journal of Asian Economics, Elsevier, vol. 23(3), pages 201-209.
  2. Lipsey, Robert E. & Sjöholm, Fredrik, 2011. "South-South FDI and Development in East Asia," Working Paper Series 885, Research Institute of Industrial Economics.
  3. Tanaka, Kiyoyasu & Hashiguchi, Yoshihiro, 2012. "Spatial spillovers from FDI agglomeration : evidence from the Yangtze River Delta in China," IDE Discussion Papers 354, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  4. Anwar, Sajid & Sun, Sizhong, 2012. "FDI and market entry/exit: Evidence from China," Journal of Asian Economics, Elsevier, vol. 23(5), pages 487-498.

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