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Dynamics of outward FDI and productivity spillovers in logistics services industry: Evidence from China

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  • Ali, Usman
  • Li, Yanxi
  • Wang, Jian-Jun
  • Yue, Xiaohang
  • Chang, Ai-Chih (Jasmine)

Abstract

China’s burgeoning connectivity and alignment with the international logistics system through Foreign Direct Investment (FDI) has powerful developmental implications for the domestic Logistics Services Industry (LSI). However, whether and to what extent the Outward FDI (OFDI) influences the domestic LSI remains an untapped research area. This study attempts to quantify the OFDI-induced productivity spillover effects in the context of China’s LSI by leveraging the most up-to-date data in conjunction with advanced econometric techniques. Our study reveals that the OFDI of logistics enterprises poses a distinctly positive impact on productivity growth in the logistics industry, and that this impact has been further strengthened since the launch of the Belt and Road Initiative. We also demonstrate a long-term bidirectional causality between the logistics enterprises' OFDI and the growth of productivity in the domestic LSI. It implies that enhancing global connectivity and supply chain collaborations requires an effective and efficient logistics operation and management, which in turn provides more opportunities to accrue positive productivity spillovers. The results remain robust with various datasets, specifications, and estimators. The study provides novel insights into the improvement of logistics efficiency through OFDI-facilitated technological spillovers and resource acquisition. With a better understanding of the implications and effectiveness of the Go-Global strategies, the findings can be leveraged as guidelines to assist in making informed decisions for the further development of domestic logistics, as well as for cross-border investments.

Suggested Citation

  • Ali, Usman & Li, Yanxi & Wang, Jian-Jun & Yue, Xiaohang & Chang, Ai-Chih (Jasmine), 2021. "Dynamics of outward FDI and productivity spillovers in logistics services industry: Evidence from China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).
    • Handle: RePEc:eee:transe:v:148:y:2021:i:c:s136655452100034x
    DOI: 10.1016/j.tre.2021.102258
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