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Economic growth, local industrial development and inter-regional spillovers from foreign direct investment: Evidence from China

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  • Ouyang, Puman
  • Fu, Shihe

Abstract

In many countries inward foreign direct investment (FDI) typically concentrates in a few regions. However, there is little empirical evidence on whether spatially concentrated FDI boosts economic growth in other regions within the same country. We use a dataset that covers 96% of Chinese cities from 1996 to 2004 and find that “inter-regional spillovers” from FDI concentrated in China's coastal cities have a positive and significant effect on the growth of inland cities. In addition, an inland city's industrial development affects its absorptive capacity to gain such inter-regional spillovers from coastal FDI.

Suggested Citation

  • Ouyang, Puman & Fu, Shihe, 2012. "Economic growth, local industrial development and inter-regional spillovers from foreign direct investment: Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 445-460.
  • Handle: RePEc:eee:chieco:v:23:y:2012:i:2:p:445-460
    DOI: 10.1016/j.chieco.2012.03.005
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    Cited by:

    1. KARGI, Bilal, 2014. "Portfolio in Turkish Economy, and A Long Termed Relation Between Foreign Direct Investments and The Growth, and The Structural Breakage Analysis (1980-2012)," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 70-81.
    2. repec:bla:worlde:v:40:y:2017:i:11:p:2403-2423 is not listed on IDEAS
    3. Nasser Ary Tanimoune & Cécile Batisse & Mary-Françoise Renard, 2013. "Foreign Direct Investment across China: what should we learn from spatial dependences?," Working Papers halshs-00878888, HAL.
    4. Lin, Mi & Kwan, Yum K., 2014. "FDI Spatial Spillovers in China," MPRA Paper 60754, University Library of Munich, Germany.
    5. repec:eee:ecmode:v:69:y:2018:i:c:p:205-219 is not listed on IDEAS
    6. Chunlai Chen, 2015. "Do Inland Provinces Benefit from Coastal Foreign Direct Investment in China?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(3), pages 22-41, May.
    7. Akpan, Uduak & Isihak, Salisu & Asongu, Simplice, 2014. "Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT," MPRA Paper 56810, University Library of Munich, Germany.
    8. Yuandi Wang & Lutao Ning & Jian Li & Martha Prevezer, 2016. "Foreign Direct Investment Spillovers and the Geography of Innovation in Chinese Regions: The Role of Regional Industrial Specialization and Diversity," Regional Studies, Taylor & Francis Journals, vol. 50(5), pages 805-822, May.
    9. Zhang, Kevin Honglin, 2014. "How does foreign direct investment affect industrial competitiveness? Evidence from China," China Economic Review, Elsevier, vol. 30(C), pages 530-539.
    10. repec:eee:chieco:v:46:y:2017:i:s:p:s65-s76 is not listed on IDEAS
    11. Li, Jian & Strange, Roger & Ning, Lutao & Sutherland, Dylan, 2016. "Outward foreign direct investment and domestic innovation performance: Evidence from China," International Business Review, Elsevier, vol. 25(5), pages 1010-1019.
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    13. Weiwei Liu & Xiandong Xu & Zhile Yang & Jianyu Zhao & Jing Xing, 2016. "Impacts of FDI Renewable Energy Technology Spillover on China’s Energy Industry Performance," Sustainability, MDPI, Open Access Journal, vol. 8(9), pages 1-16, August.
    14. Su, Yaqin & Liu, Zhiqiang, 2016. "The impact of foreign direct investment and human capital on economic growth: Evidence from Chinese cities," China Economic Review, Elsevier, vol. 37(C), pages 97-109.
    15. Ning, Lutao & Wang, Fan & Li, Jian, 2016. "Urban innovation, regional externalities of foreign direct investment and industrial agglomeration: Evidence from Chinese cities," Research Policy, Elsevier, vol. 45(4), pages 830-843.
    16. Sholpan Smagulova & Gulashar Zh. Doskeyeva & Natalya Radko, 2016. "Analysis of the Oil Market and the Role of Investment in the Agrarian Sector in Kazakhstan," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 798-806.

    More about this item

    Keywords

    Foreign direct investment; Regional inequality; Inter-regional spillovers; Absorptive capacity; Growth;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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