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The role of FDI in domestic exporting: Evidence from China

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  • Sun, Sizhong

Abstract

This paper investigates the impact of FDI on domestic exporting firms. We show that domestic firms respond to an increase in the presence of FDI by increasing their exports even though the increase in foreign presence can drive up production costs and make the domestic market more profitable. Our test case for this hypothesis is China, where we confirm the significant positive impact of FDI on domestic firms’ exports. This finding sheds light on the massive exports and rapid inflow of foreign investment that have been observed in China in the past three decades.

Suggested Citation

  • Sun, Sizhong, 2012. "The role of FDI in domestic exporting: Evidence from China," Journal of Asian Economics, Elsevier, vol. 23(4), pages 434-441.
  • Handle: RePEc:eee:asieco:v:23:y:2012:i:4:p:434-441
    DOI: 10.1016/j.asieco.2012.03.004
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    References listed on IDEAS

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    2. Sizhong Sun, 2014. "Foreign Entry and Firm Advertising Intensity: Evidence from China," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(1), pages 79-97, August.
    3. repec:taf:rjapxx:v:21:y:2016:i:3:p:325-338 is not listed on IDEAS
    4. repec:spr:manint:v:54:y:2014:i:2:d:10.1007_s11575-013-0195-y is not listed on IDEAS
    5. repec:eee:quaeco:v:65:y:2017:i:c:p:107-113 is not listed on IDEAS
    6. Giorgio Prodi & Federico Frattini & Francesco Nicolli, 2016. "Regional Innovation Systems in China: A long-term perspective based on patent data at the prefectural level," SEEDS Working Papers 0316, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Apr 2016.
    7. Lee, Hyun-Hoon & Park, Donghyun & Wang, Jing, 2013. "Different types of firms, different types of products, and their dynamics: An anatomy of China's imports," China Economic Review, Elsevier, vol. 25(C), pages 62-77.

    More about this item

    Keywords

    Export; Foreign firm; FDI; Spillovers; China;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F10 - International Economics - - Trade - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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