What Determines Technological Spillovers of Foreign Direct Investment: Evidence from China
Using the World Bank survey of 1500 firms in five Chinese cities, we study whether the presence of foreign firms produces technology spillovers on domestic firms operating in the same city and industry. We find positive spillovers for more backward firms. We analyze the channels of such spillovers and find that the transfer of technology occurs through movement of high-skilled workers from FDI firms to domestic firms as well as through network externalities among high-skilled workers. Moreover, these two channels fully account for the spillover effects we find, which demonstrate the importance of well-functioning labor market in facilitating FDI spillovers. Insofar as our results can be generalized to other countries, they reconcile conflicting evidence found in other studies.
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Paper provided by Economic Growth Center, Yale University in its series Working Papers with number
934.
| Length: | 31 pages |
| Date of creation: | Apr 2006 |
| Handle: | RePEc:egc:wpaper:934 |
| Contact details of provider: | Postal: PO Box 8269, New Haven CT 06520-8269 Phone: (203) 432-3610 Fax: (203) 432-3898 Web page: http://www.econ.yale.edu/ More information through EDIRC
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