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Putting people first? Chinese state-owned enterprises' adjustment to globalisation

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  • Girma, Sourafel
  • Gong, Yundan

Abstract

This paper analyses the impact of FDI on the employment, productivity, profitability and survival performance of urban SOEs in China, with the aid of a rich panel data set over the period 1999-2005. Our estimation strategy controls for the endogeneity of a number of regressors and accounts for firm-level unobserved heterogeneity. Four key results emerge from the analysis: (i) Firm-level foreign finance enhances the employment and productivity growth of SOEs, as well as their survival prospects; (ii) Competition from sectoral FDI has a deleterious impact on the growth and survival probability of SOEs without access to any foreign capital; (iii) Export-oriented FDI in downstream sectors has negative performance ramifications; and (iv) There are no discernible spillover effects that can be attributed to FDI in upstream sectors, suggesting limited linkages between multinational firms and SOEs.

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  • Girma, Sourafel & Gong, Yundan, 2008. "Putting people first? Chinese state-owned enterprises' adjustment to globalisation," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 573-585, March.
    • Handle: RePEc:eee:indorg:v:26:y:2008:i:2:p:573-585
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    2. Adam Blake & Ziliang Deng & Rod Falvey, 2009. "How does the productivity of foreign direct investment spill over to local firms in Chinese manufacturing?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 7(2), pages 183-197.
    3. Motohashi, Kazuyuki & Yuan, Yuan, 2010. "Productivity impact of technology spillover from multinationals to local firms: Comparing China's automobile and electronics industries," Research Policy, Elsevier, vol. 39(6), pages 790-798, July.
    4. Prud'homme, Dan, 2012. "China's Government-Set Patent Targets and Performance Indicators: Boosting Numbers or Innovation?," MPRA Paper 51736, University Library of Munich, Germany.
    5. Hongzhong Fan & Shi He & Yum K. Kwan, 2020. "FDI Backward Spillovers in China: What a Meta-Analysis Tells Us?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(1), pages 86-105, January.
    6. Zhou Wei & Adel Ben Youssef, 2012. "The productivity impact of international technology transfer in China: Empirical investigation on Chinese regions," Economics Bulletin, AccessEcon, vol. 32(2), pages 1590-1603.
    7. Jianhong Qi & Yingmei Zheng & James Laurenceson & Hong Li, 2009. "Productivity Spillovers from FDI in China: Regional Differences and Threshold Effects," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(4), pages 18-35, July.
    8. Anna Ferragina & Fernanda Mazzotta, 2014. "FDI spillovers on firm survival in Italy: absorptive capacity matters!," The Journal of Technology Transfer, Springer, vol. 39(6), pages 859-897, December.
    9. Prud'homme, Dan, 2012. "Dulling the Cutting Edge: How Patent-Related Policies and Practices Hamper Innovation in China," MPRA Paper 43299, University Library of Munich, Germany, revised Dec 2012.
    10. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    11. MOTOHASHI Kazuyuki & YUAN Yuan, 2009. "Technology Spillovers from Multinationals to Local Firms: Evidence from Automobile and Electronics Firms in China," Discussion papers 09005, Research Institute of Economy, Trade and Industry (RIETI).
    12. Prud'homme, Dan, 2012. "A statistical analysis of China's patent quality situation and larger innovation ecosystem," MPRA Paper 51619, University Library of Munich, Germany.
    13. Yanling Wang, 2013. "Exposure to FDI and new plant survival: evidence in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(1), pages 46-77, February.
    14. Canfei He & Rudai Yang, 2016. "Determinants of Firm Failure: Empirical Evidence from China," Growth and Change, Wiley Blackwell, vol. 47(1), pages 72-92, March.
    15. Prud'homme, Dan, 2012. "How certain indigenous innovation and other patent policies hamper innovation in China," MPRA Paper 51710, University Library of Munich, Germany, revised Dec 2012.
    16. Celeste Varum & Vera Rocha, 2013. "Employment and SMEs during crises," Small Business Economics, Springer, vol. 40(1), pages 9-25, January.
    17. Yanling Wang, 2010. "Exposure to FDI and New Plant Survival: Evidence in Canada," Carleton Economic Papers 10-05, Carleton University, Department of Economics.
    18. Pedro Silva & António Carrizo Moreira, 2021. "Foreign and multinational ownership impact on firm exit: A sectoral analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1550-1563, September.

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