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Productivity Spillovers from FDI in China: Regional Differences and Threshold Effects


  • Jianhong Qi
  • Yingmei Zheng
  • James Laurenceson
  • Hong Li


Economic theory posits numerous channels through which FDI might create positive spillovers for domestic firms. However, the results of empirical studies that have sought to document these spillovers have been mixed. One explanation for this variation is that the capacity of domestic firms to absorb spillovers might vary. In the present paper, we explore these issues in the case of China. Aside from being one of the world's leading hosts of foreign direct investment, China makes for an interesting case study because its provinces vary greatly with respect to those factors most commonly held to influence absorptive capacity, such as the initial level of technology in domestic firms. This paper begins by empirically establishing that the spillovers from foreign direct investment do indeed vary across provinces. Threshold values for various factors that influence absorptive capacity factors are then estimated and it is found that conditions in many provinces presently fall short of these values. This provides an obvious focus of attention for China's policy-makers. Copyright (c) 2009 The Authors Journal compilation (c) 2009 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Suggested Citation

  • Jianhong Qi & Yingmei Zheng & James Laurenceson & Hong Li, 2009. "Productivity Spillovers from FDI in China: Regional Differences and Threshold Effects," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(4), pages 18-35.
  • Handle: RePEc:bla:chinae:v:17:y:2009:i:4:p:18-35

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    Cited by:

    1. Guillaumont Jeanneney, Sylviane & Hua, Ping, 2011. "How does real exchange rate influence labour productivity in China?," China Economic Review, Elsevier, vol. 22(4), pages 628-645.
    2. Metaxas, Theodore & Kechagia, Polyxeni, 2012. "F.D.I. through the imitation procedure The case of China: A Note," MPRA Paper 40886, University Library of Munich, Germany.
    3. Kiyoyasu Tanaka & Yoshihiro Hashiguchi, 2015. "Spatial Spillovers from Foreign Direct Investment: Evidence from the Yangtze River Delta in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(2), pages 40-60, March.
    4. Lo, Dic & Hong, Fuhai & Li, Guicai, 2016. "Assessing the role of inward foreign direct investment in Chinese economic development, 1990–2007: Towards a synthesis of alternative views," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 107-120.
    5. repec:spr:manint:v:55:y:2015:i:4:d:10.1007_s11575-014-0235-2 is not listed on IDEAS

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