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FDI and Industrial Competitiveness in Developing Countries: Evidence from China - IDE e competitività industriale nei paesi in via di sviluppo: evidenze dalla Cina

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Abstract

Building up industrial competitiveness (IC) is a must for developing countries to industrialize their economies. How does foreign direct investment (FDI) affect IC? This study attempts to offer an answer to the question by using recent Chinese panel dataset. The significance of the topic, besides the intrinsic importance of IC, is heightened by outstanding performance of the Chinese industry and massive increase in FDI flows into China in the past decade. Based on 21 manufacturing sectors for 31 regions in 2005- 2011, we construct, following the method recently developed by UNIDO (2013), an index to measure multidimensional IC. Panel estimations suggest that FDI indeed promote IC, but its benefits are largely conditional on domestic learning from FDI or absorptive capability. FDI seems to be more important to manufactured exports and industrial capacity, its contributions to technology deepening and upgrading seem to be limited. - Il miglioramento della competitività industriale è strettamente necessario per i paesi in via di sviluppo per la industrializzazione delle economie. In quale modo gli IDE influenzano la competitività industriale? Questa ricerca cerca di rispondere utilizzando dati panel recenti relativi alla Cina. L’importanza dell’argomento, oltre all’importanza intrinseca della competitività industriale, è accresciuta dalle eccellenti prestazioni dell’industria cinese e dal massiccio incremento del flusso di IDE in Cina nell’ultimo decennio. Prendendo a campione 21 settori produttivi per 31 regioni nel periodo 2005-2011, seguendo il metodo recentemente sviluppato da UNIDO nel 2013, abbiamo costruito un indice per la misurazione multidimensionale della competitività industriale. Stime panel suggeriscono che gli IDE promuovono la competitività industriale, ma i benefici condizionano fortemente la formazione interna o le capacità di assorbimento. Secondo i risultati gli IDE incrementano le esportazioni e la capacità industriale, mentre hanno un effetto limitato sullo sviluppo tecnologico.

Suggested Citation

  • Zhang, Kevin Honglin, 2014. "FDI and Industrial Competitiveness in Developing Countries: Evidence from China - IDE e competitività industriale nei paesi in via di sviluppo: evidenze dalla Cina," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 67(4), pages 555-572.
    • Handle: RePEc:ris:ecoint:0736
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    Keywords

    Industrial Competitiveness (IC); Foreign Direct Investment (FDI); and Multinational Corporations (MNCs);
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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