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Impact of FDI on Domestic Firms' Exports in China


Author Info

  • Yu Sheng

    (Crawford School of Economics and Governance, Australian National University)

  • Chunlai Chen

    (Crawford School of Economics and Governance, Australian National University)

  • Christopher Findlay

    (School of Economics, University of Adelaide)


Using manufacturing industry firm-level census data from the period of 2000-2003 in China, this paper examines the impact of foreign direct investment on domestic firms' exports. After dealing with econometric problems of endogeneity and sample selection, we find that foreign direct investment in China has had a positive impact on domestic firms' export value through backward industrial linkages and a positive impact on domestic firms' export propensities in the same industry through demonstration effects. In particular, non-exporting FDI firms and FDI firms producing homogeneous products are more likely to generate the positive export spillovers to domestic firms through industrial linkages while exporting FDI firms and FDI firms producing heterogeneous products are more likely to generate positive export spillovers to domestic firms through demonstration effects in the same industry.

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Bibliographic Info

Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2011-15.

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Length: 38 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:adl:wpaper:2011-15

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Keywords: Foreign Direct Investment; export spillovers; industrial linkage;

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Cited by:
  1. 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.


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