Regional Assessment of Openness and Productivity Spillovers in China from 1979 to 2006: A Space-Time Model
AbstractThis study investigates the impact of inward foreign direct investment (FDI) flows and international trade on labour productivity in 30 Chinese provinces over the period 1979-2006. Since China launched the “open door” policy in 1978, the country has been attracting a growing share of FDI flows and its international trade has been expanding considerably. China’s accession into the WTO in 2001 has also started a new era in its integration into the world economy. In this paper, we model labour productivity as dependent on FDI, foreign trade and other traditional variables such as capital intensity, infrastructure and human capital development. Our empirical analysis improves the existing wide literature by taking into account spatial effects and potential econometric issues they imply. Using recently developed spatial data analysis tools, we explore the pattern, (weather it be negative or positive) and the extent of spatial interaction of labour productivity between regions. Thereby, we extend previous research by testing the explanatory power of additional variables such as spatially lagged independent and dependent variables. The explicit consideration of spatial dependence in the modelling scheme provides us a better understanding of the regional spillovers process. Our results indicate a general trend of spatial autocorrelation in labour productivity during the study period. Put differently, in China, the productivity of a given region is highly determined by those of surrounding regions. In addition, our empirical outcomes yield support for positive and significant impacts of FDI and foreign trade on labour productivity. Furthermore, in China, FDI and trade exhibit a positive spatial pattern and give rise to interregional productivity spillovers among provinces. These findings are robust to a number of alternative spatial weighting matrix specifications.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 08-15.
Length: 33 pages
Date of creation: Sep 2008
Date of revision: Sep 2008
Contact details of provider:
Postal: Avenue Raymond Dugrand, CS 79606, 34960 Montpellier Cedex 2
Web page: http://www.lameta.univ-montp1.fr/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-29 (All new papers)
- NEP-CNA-2008-09-29 (China)
- NEP-EFF-2008-09-29 (Efficiency & Productivity)
- NEP-GEO-2008-09-29 (Economic Geography)
- NEP-INT-2008-09-29 (International Trade)
- NEP-TRA-2008-09-29 (Transition Economics)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patricia Modat).
If references are entirely missing, you can add them using this form.