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Impact of outward FDI on firms’ productivity over the food industry: evidence from China

Author

Listed:
  • Ting-gui Chen
  • Gan Lin
  • Mitsuyasu Yabe

Abstract

Purpose - The purpose of this paper is to study the impact of outward foreign direct investment (OFDI) on the productivity of parent firms over the food industry. Design/methodology/approach - The main data in this paper are derived from the China Industrial Enterprise Database 2005–2013 and a data set of Chinese firms’ OFDI information. Then this paper uses propensity score matching to match the treatment and control groups with firm characteristics and combines that with the differences-in-differences method to estimate the real effect of OFDI on total factor productivity. Findings - The food firm’s OFDI significantly improves the parent firm’s productivity (known as the OFDI own-firm effect), but this promotion only exists in the short term. The OFDI own-firm effect of food firms differs remarkably as the sub-sectors, regions and ownership of firms vary. The food firm’s OFDI in “non-tax havens” and high-income destinations has a significantly stronger effect on the parent firm’s productivity. FDI, R&D and exporting can effectively strengthen the OFDI own-firm effect of food firms. Originality/value - The effect of OFDI on food industry productivity has not been researched yet. This paper aims to fill this gap. This paper further divides the characteristics of food firms into different sub-sectors, regions and ownership types for a comparative analysis, with the aim of conducting a more comprehensive study at the micro-level of firms. In addition, an investigation into which factors influence the degree of the OFDI own-firm effect at the micro-level has not been found in the literature. This paper will draw its own conclusions.

Suggested Citation

  • Ting-gui Chen & Gan Lin & Mitsuyasu Yabe, 2019. "Impact of outward FDI on firms’ productivity over the food industry: evidence from China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 11(4), pages 655-671, June.
    • Handle: RePEc:eme:caerpp:caer-12-2017-0246
    DOI: 10.1108/CAER-12-2017-0246
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    Cited by:

    1. Prajukta Tripathy & Pragyanrani Behera & Bikash Ranjan Mishra, 2023. "Study of linkages between productivity, export, and outward foreign direct investment: An empirical perspective of Indian manufacturing industries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1527-1548, April.

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