Foreign Direct Investment, Access to Finance, and Innovation Activity in Chinese Enterprises
AbstractA recent, comprehensive database is used to investigate the link between inward foreign direct investment (FDI) and innovation activity in China. The results of the analysis suggest that private and collectively owned firms with foreign capital participation and those with good access to domestic bank loans innovate more than other firms do. Among enterprises not owned by the state, inward FDI at the sectoral level is positively associated with domestic innovative activity only among firms that engage in their own research and development or that have good access to domestic finance. At the sector level the effect of inward FDI into technology transfer is distinguished from the effect on domestic credit opportunities. FDI affecting credit is of little significance for state-owned enterprises and is independent of their access to finance. In contrast, better access to credit is an important channel through which FDI affects the innovation of domestic private and collectively owned enterprises. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: email@example.com, Oxford University Press.
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Bibliographic InfoArticle provided by World Bank Group in its journal The World Bank Economic Review.
Volume (Year): 22 (2008)
Issue (Month): 2 (June)
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Other versions of this item:
- Girma, Sourafel & Gong, Yundan & Görg, Holger, 2008. "Foreign direct investment, access to finance, and innovation activity in Chinese enterprises," Open Access Publications from Kiel Institute for the World Economy 28838, Kiel Institute for the World Economy (IfW).
- Sourafel Girma & Yundan Gong & Holger Görg, 2008. "Foreign direct investment, access to finance, and innovation activity in Chinese enterprises," Kiel Working Papers 1400, Kiel Institute for the World Economy.
- Sourafel Girma & Yundan Gong & Holger Gorg, . "Foreign Direct Investment, Access to Finance, and Innovation Activity in Chinese Enterprises," Discussion Papers 07/44, University of Nottingham, GEP.
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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