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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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  1. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
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