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Institutional Environment, OFDI, and TFP Growth: Evidence from China

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  • Yaoguo Wu
  • Yuegang Song
  • Guoying Deng

Abstract

Using Chinese Industrial Enterprise Database and Foreign Investment Enterprises database (2003–2007), this article studies the impact of institutional environment and outward foreign direct investment (OFDI) on total factor productivity (TFP) at firm and provincial level. The results show that good institutional environment is conducive to firm and provincial level TFP growth, OFDI also proves to be positive. Considering spatial correlation, provinces with strong TFP have negative impact on adjacent provinces. For different ownership enterprises in home country, favorable institutional environment promotes the TFP growth of private enterprises, while OFDI has a significant positive effect on the TFP growth of both private and foreign-invested enterprises, the TFP of private enterprises show obvious polarization effect.

Suggested Citation

  • Yaoguo Wu & Yuegang Song & Guoying Deng, 2017. "Institutional Environment, OFDI, and TFP Growth: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(9), pages 2020-2038, September.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:9:p:2020-2038
    DOI: 10.1080/1540496X.2017.1283612
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    Cited by:

    1. Xiaoling Zhang & Decai Tang & Brandon J. Bethel, 2021. "Analyzing the Characteristics and Evolution of Chinese Enterprises’ Outward Forward Direct Investment Host Country Network," Sustainability, MDPI, vol. 13(17), pages 1-19, September.
    2. Razzaq, Asif & An, Hui & Delpachitra, Sarath, 2021. "Does technology gap increase FDI spillovers on productivity growth? Evidence from Chinese outward FDI in Belt and Road host countries," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    3. Xiaoling Zhang & Decai Tang & Yi Li & Valentina Boamah & Yisi Liu, 2022. "Analysis of OFDI Industry Linkage Network Based on Grey Incidence: Taking the Jiangsu Manufacturing Industry as an Example," Sustainability, MDPI, vol. 14(9), pages 1-17, May.
    4. Sun, Yunpeng & Razzaq, Asif & Kizys, Renatas & Bao, Qun, 2022. "High-speed rail and urban green productivity: The mediating role of climatic conditions in China," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    5. Bin Li & Shuai Shi & Yating Zeng, 2020. "The Impact of Haze Pollution on Firm-Level TFP in China: Test of a Mediation Model of Labor Productivity," Sustainability, MDPI, vol. 12(20), pages 1-21, October.

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