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Foreign Direct Investment and Technology Spillovers in China's Manufacturing Sector

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  • Sizhong Sun

Abstract

This article explores the technology spillovers of foreign direct investment (FDI) in China's manufacturing sector in 2003. Using a simultaneous equation model estimated over a comprehensive firm-level data set, we find that foreign direct investment in China generates significant and positive technology spillovers to domestic firms, with a 1 percent increase in foreign presence promoting labor productivity of domestic firms by more than 5 percent. The substantial positive spillovers not only justify, to some extent, China's FDI policy setting, but also indicate that China is likely to continue to benefit from attracting more FDI inflow in the future.

Suggested Citation

  • Sizhong Sun, 2011. "Foreign Direct Investment and Technology Spillovers in China's Manufacturing Sector," Chinese Economy, Taylor & Francis Journals, vol. 44(2), pages 25-42, March.
    • Handle: RePEc:mes:chinec:v:44:y:2011:i:2:p:25-42
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    Citations

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    Cited by:

    1. Nguyen, Dao Thi Hong & Sun, Sizhong & Anwar, Sajid, 2017. "A long-run and short-run analysis of the macroeconomic interrelationships in Vietnam," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 15-25.
    2. Sizhong Sun, 2023. "Firm heterogeneity, worker training and labor productivity: the role of endogenous self-selection," Journal of Productivity Analysis, Springer, vol. 59(2), pages 121-133, April.
    3. Sun, Sizhong & Anwar, Sajid, 2017. "Foreign direct investment and the performance of indigenous firms in China’s textile industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 107-113.
    4. Minbaeva, Dana & Park, Chansoo & Vertinsky, Ilan & Cho, Yeon Sung, 2018. "Disseminative capacity and knowledge acquisition from foreign partners in international joint ventures," Journal of World Business, Elsevier, vol. 53(5), pages 712-724.
    5. Zainab Asif & Radhika Lahiri, 2021. "Dimensions of human capital and technological diffusion," Empirical Economics, Springer, vol. 60(2), pages 941-967, February.
    6. Sun, Sizhong & Anwar, Sajid, 2022. "Estimation of product quality in China's food processing and manufacturing industries," Economic Modelling, Elsevier, vol. 107(C).
    7. Sonja Opper & Fredrik N. G. Andersson, 2019. "Are entrepreneurial cultures stable over time? Historical evidence from China," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1165-1192, December.
    8. Turnbull, Christopher & Sun, Sizhong & Anwar, Sajid, 2016. "Trade liberalisation, inward FDI and productivity within Australia’s manufacturing sector," Economic Analysis and Policy, Elsevier, vol. 50(C), pages 41-51.

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