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Impact of FDI on Domestic Firms' Exports in China

Author

Listed:
  • Yu Sheng

    (Crawford School of Economics and Governance, Australian National University)

  • Chunlai Chen

    (Crawford School of Economics and Governance, Australian National University)

  • Christopher Findlay

    () (School of Economics, University of Adelaide)

Abstract

Using manufacturing industry firm-level census data from the period of 2000-2003 in China, this paper examines the impact of foreign direct investment on domestic firms' exports. After dealing with econometric problems of endogeneity and sample selection, we find that foreign direct investment in China has had a positive impact on domestic firms' export value through backward industrial linkages and a positive impact on domestic firms' export propensities in the same industry through demonstration effects. In particular, non-exporting FDI firms and FDI firms producing homogeneous products are more likely to generate the positive export spillovers to domestic firms through industrial linkages while exporting FDI firms and FDI firms producing heterogeneous products are more likely to generate positive export spillovers to domestic firms through demonstration effects in the same industry.

Suggested Citation

  • Yu Sheng & Chunlai Chen & Christopher Findlay, 2011. "Impact of FDI on Domestic Firms' Exports in China," School of Economics Working Papers 2011-15, University of Adelaide, School of Economics.
  • Handle: RePEc:adl:wpaper:2011-15
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    File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2011-15.pdf
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    Cited by:

    1. Pierre-Guillaume Méon & Khalid Sekkat, 2013. "FDI and Exports Diversification in Arab Countries," Working Papers 816, Economic Research Forum, revised Dec 2013.
    2. Nie, Huihua & Jiang, Ting & Yang, Rudai, 2012. "A Review and Reflection on the Use and Abuse of Chinese Industrial Enterprises Database," MPRA Paper 50945, University Library of Munich, Germany.

    More about this item

    Keywords

    Foreign Direct Investment; export spillovers; industrial linkage;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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