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How Does the Productivity of Foreign Direct Investment Spill over to Local Firms in Chinese Manufacturing?

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  • Adam Blake
  • Ziliang Deng
  • Rod Falvey

Abstract

We use a firm-level dataset for Chinese manufacturing, to estimate productivity spillovers from foreign direct investment (FDI) to local firms. The spillover channels considered include inter-firm labour turnover/mobility; vertical input-output linkages; exporting externalities; and horizontal effects. The roles of these channels are dependent on various factors including export propensity, R&D expenditure per capita, employee training, and ownership structure. We find that export of MNEs is the most prominent spillover channel. Labour turnover and horizontal demonstration and competition bring positive spillovers to SOEs but not to local private firms. Vertical linkages are not found to be significant.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 09/03.

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Handle: RePEc:not:notgep:09/03

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Keywords: productivity spillover; foreign direct investment (FDI); labour mobility/turnover; linkages; export;

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Citations

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Cited by:
  1. Ziliang Deng & Rod Falvey & Adam Blake, 2013. "Quantifying Foreign Direct Investment Productivity Spillovers in China: A Computable General Equilibrium Model," Asian Economic Journal, East Asian Economic Association, vol. 27(4), pages 369-389, December.
  2. Tomas Havranek & Zuzana Irsova, 2012. "Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(10), pages 1375-1396, October.
  3. Natasha Agarwal & Chris Milner, . "FDI Spillovers in China – Connecting the Missing Link between Micro and Macro," Discussion Papers 11/20, University of Nottingham, GEP.
  4. Tomáš Havránek & Zuzana Iršová, 2011. "How to Stir Up FDI Spillovers: Evidence from a Large Meta-Analysis," Working Papers IES 2011/34, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2011.
  5. Iršová, Zuzana & Havránek, Tomáš, 2013. "Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis," World Development, Elsevier, vol. 42(C), pages 1-15.
  6. Deng, Ziliang & Falvey, Rod & Blake, Adam, 2012. "Trading market access for technology? Tax incentives, foreign direct investment and productivity spillovers in China," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 675-690.
  7. Ziliang Deng & Adam Blake & Rod Falvey, . "Quantifying Foreign Direct Investment Productivity Spillovers: A Computable General Equilibrium Framework for China," Discussion Papers 09/18, University of Nottingham, GEP.

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