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What Determines Innovation Activity in Chinese State-owned Enterprises? The Role of Foreign Direct Investment

  • Girma, Sourafel
  • Gong, Yundan
  • Görg, Holger

Summary We investigate whether inward foreign direct investment (FDI), either at the firm or industry level, has any impact on product innovation by Chinese state-owned enterprises (SOEs). We use a comprehensive firm-level panel data set of some 20,000 SOEs during 1999-2005. Our results show that foreign capital participation at the firm level is associated with higher innovative activity. Inward FDI in the sector, by contrast, has a negative effect on innovative activity in SOEs on average. However, there is a positive effect of sector-level FDI on SOEs that export, invest in human capital, or undertake R&D.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 37 (2009)
Issue (Month): 4 (April)
Pages: 866-873

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Handle: RePEc:eee:wdevel:v:37:y:2009:i:4:p:866-873
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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  7. Bruno Crépon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation and Productivity : An Econometric Analysis at the Firm Level," Working Papers 98-33, Centre de Recherche en Economie et Statistique.
  8. Chien-Hsun Chen, 1996. "Regional determinants of foreign direct investment in mainland China," Journal of Economic Studies, Emerald Group Publishing, vol. 23(2), pages 18-30, May.
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  11. Sourafel Girma, 2003. "Absorptive capacity and productivity spillovers From FDI: a threshold regression analysis," European Economy Group Working Papers 25, European Economy Group.
  12. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
  13. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 529-554.
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