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Productivity Spillovers from Foreign Direct Investment: Firm-Level Evidence from China

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  • Xu, Xinpeng
  • Sheng, Yu
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Abstract

Using firm-level census data, this paper examines the spillover effects of foreign direct investment (FDI) on domestic firms in the Chinese manufacturing industry between 2000 and 2003. Our analysis takes into account the endogeniety of input choices, simultaneity bias, and clustering errors that are known to cause biased and inefficient estimations. Our results suggest that positive spillovers from FDI arise from forward linkages where domestic firms purchase high-quality intermediate goods or equipment from foreign firms in the upstream sectors. Our results also show that domestic firms differ significantly in the extent to which they benefit from FDI.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 40 (2012)
Issue (Month): 1 ()
Pages: 62-74

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Handle: RePEc:eee:wdevel:v:40:y:2012:i:1:p:62-74

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

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Keywords: foreign direct investment; spillover effects; Asia; China;

References

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Citations

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Cited by:
  1. Vincelette, Gallina Andronova & Manoel, Alvaro & Hansson, Ardo & Kuijs, Louis, 2010. "China : global crisis avoided, robust economic growth sustained," Policy Research Working Paper Series 5435, The World Bank.
  2. Nie, Huihua & Jiang, Ting & Yang, Rudai, 2012. "A Review and Reflection on the Use and Abuse of Chinese Industrial Enterprises Database," MPRA Paper 50945, University Library of Munich, Germany.
  3. Merlevede, Bruno & Schoors, Koen & Spatareanu , Mariana, 2013. "FDI spillovers and time since foreign entry," BOFIT Discussion Papers 27/2013, Bank of Finland, Institute for Economies in Transition.
  4. Siping Luo & Mary E. Lovely & David Popp, 2013. "Intellectual Returnees as Drivers of Indigenous Innovation: Evidence from the Chinese Photovoltaic Industry," NBER Working Papers 19518, National Bureau of Economic Research, Inc.
  5. 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.

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