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FDI Spillovers in the Chinese Manufacturing Sector: Evidence of firm heterogeneity


  • Abraham, Filip
  • Konings, Jozef
  • Slootmaekers, Veerle


We use a new longitudinal data set of more than 15,000 Chinese manufacturing plants to show that the direct and indirect effects of foreign direct investment on measured firm level productivity depend on a number of firm specific features and institutional factors. We find that domestic firms engaged in a joint-venture with a foreign partner are on average more productive, as well as exporting plants and plants located in special economic zones. In addition, domestic firms benefit from horizontal spillovers from foreign firms on average. However, these spillovers depend on the structure and origin of ownership as well as on specific characteristics of the special economic zones. First, spillovers are less likely to occur from fully foreign owned firms than from joint-ventures. Second, spillovers from foreign direct investment originating from oversees Chinese (Hong Kong, Macau and Taiwan) are stronger than from the rest of the world. Third, spillovers are higher in the special economic zone aimed at attracting foreign capital to fasten the development of China’s own high tech industries.

Suggested Citation

  • Abraham, Filip & Konings, Jozef & Slootmaekers, Veerle, 2007. "FDI Spillovers in the Chinese Manufacturing Sector: Evidence of firm heterogeneity," CEPR Discussion Papers 6573, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6573

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    Cited by:

    1. Ari Van Assche & Chang Hong & Veerle Slootmaekers, 2008. "China's International Competitiveness: Reassessing the Evidence," LICOS Discussion Papers 20508, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    2. Lipsey, Robert E. & Sjöholm, Fredrik, 2011. "South–South FDI and Development in East Asia," Asian Development Review, Asian Development Bank, vol. 28(2), pages 11-31.
    3. Poncet, Sandra & Steingress, Walter & Vandenbussche, Hylke, 2010. "Financial constraints in China: Firm-level evidence," China Economic Review, Elsevier, vol. 21(3), pages 411-422, September.
    4. David Greenaway & Alessandra Guariglia & Zhihong Yu, 2014. "The more the better? Foreign ownership and corporate performance in China," The European Journal of Finance, Taylor & Francis Journals, vol. 20(7-9), pages 681-702, September.
    5. Jeon, Yongbok & Park, Byung Il & Ghauri, Pervez N., 2013. "Foreign direct investment spillover effects in China: Are they different across industries with different technological levels?," China Economic Review, Elsevier, vol. 26(C), pages 105-117.
    6. Yuqing Xing, 2008. "FDI in China: Facts and Impacts on China and the World Economy," Working Papers EMS_2008_03, Research Institute, International University of Japan.
    7. Guariglia, Alessandra & Liu, Xiaoxuan & Song, Lina, 2011. "Internal finance and growth: Microeconometric evidence on Chinese firms," Journal of Development Economics, Elsevier, vol. 96(1), pages 79-94, September.
    8. Anwar, Sajid & Sun, Sizhong, 2012. "FDI and market entry/exit: Evidence from China," Journal of Asian Economics, Elsevier, vol. 23(5), pages 487-498.
    9. Filip Abraham & Jan Van Hove, 2010. "Can Belgian firms cope with the Chinese dragon and the Asian tigers ? The export performance of multi-product firms on foreign markets," Working Paper Research 204, National Bank of Belgium.

    More about this item


    China; firm heterogeneity; Productivity; Spillovers;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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