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Globalization, Foreign Direct Investment, and Regional Innovation in China

In: Foreign Direct Investment and Small and Medium Enterprises Productivity and Access to Finance

Author

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  • Yi Zhang
  • Hein Roelfsema

Abstract

This chapter explores the connection between the external opening of China and differences in innovation across Chinese regions. For the period 1995–2010, we find that regions that attract inward foreign direct investment (FDI) and exports have become more innovative. Further, we show a U-shaped relation between globalization, regional income levels, and innovation, where both the lower middle-income and the most advanced regions gain from globalization in terms of increased innovation. The higher middle-income regions gain little from globalization in terms of innovation. We provide evidence that differences in ownership structures of foreign investments and outsourcing drive the results.

Suggested Citation

  • Yi Zhang & Hein Roelfsema, 2015. "Globalization, Foreign Direct Investment, and Regional Innovation in China," World Scientific Book Chapters, in: Khee Giap Tan & Kong Yam Tan (ed.), Foreign Direct Investment and Small and Medium Enterprises Productivity and Access to Finance, chapter 2, pages 9-34, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814678810_0002
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    Cited by:

    1. Shicong XU & Abdoul G. SAM, 2021. "Diversity Or Specializarion? Understanding Knowledge Spillover Mechanisms In China," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 225-238, June.
    2. Zhu, JianJun (John) & Tse, Caleb H. & Li, Xu, 2019. "Unfolding China’s state-owned corporate empires and mitigating agency hazards: Effects of foreign investments and innovativeness," Journal of World Business, Elsevier, vol. 54(3), pages 191-212.
    3. Zheng, Mingbo & Feng, Gen-Fu & Feng, Suling & Yuan, Xuemei, 2019. "The road to innovation vs. the role of globalization: A dynamic quantile investigation," Economic Modelling, Elsevier, vol. 83(C), pages 65-83.
    4. Feng, Gen-Fu & Zheng, Mingbo & Wen, Jun & Chang, Chun-Ping & Chen, Yin E., 2019. "The assessment of globalization on innovation in Chinese manufacturing firms," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 190-202.

    More about this item

    Keywords

    Foreign Direct Investment; The Spillover Effects; Small and Medium Enterprises; Regional Innovation; Entrepreneurial Activities; Trade and Investment; Bank Lending; Labor Productivity;
    All these keywords.

    JEL classification:

    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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