Can You Teach Old Dragons New Tricks? FDI and Innovation Activity in Chinese State-Owned Enterprises
AbstractWe investigate whether inward FDI, either at the firm or industry level, has any impact on product innovation by Chinese State owned enterprises (SOEs). We use a comprehensive firm level panel data set of Chinese SOEs covering the period 1999 to 2003. Our results show that foreign capital participation is associated with higher innovative activity. Inward FDI in the sector has a negative effect on innovative activity in SOEs. However, there is a positive effect of FDI on SOEs that export, invest in human capital or R&D, or have prior innovation experience. We also find that SOEs with internal R&D activity and human capital development are successful innovators. Hence, our results suggest that rather than relying on sector level inward FDI to improve domestic innovative activity, it is important to get the firm-level fundamentals right.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5838.
Date of creation: Sep 2006
Date of revision:
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Other versions of this item:
- Girma, Sourafel & Gong, Yundan & Görg, Holger, 2006. "Can You Teach Old Dragons New Tricks? FDI and Innovation Activity in Chinese State-Owned Enterprises," IZA Discussion Papers 2267, Institute for the Study of Labor (IZA).
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-28 (All new papers)
- NEP-CNA-2006-10-28 (China)
- NEP-DEV-2006-10-28 (Development)
- NEP-INO-2006-10-28 (Innovation)
- NEP-SEA-2006-10-28 (South East Asia)
- NEP-TRA-2006-10-28 (Transition Economics)
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