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FDI, Market Structure and R&D Investments in China

Author

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  • Lundin, Nannan

    () (Research Institute of Industrial Economics (IFN))

  • Sjöholm, Fredrik

    () (Research Institute of Industrial Economics (IFN))

  • He, Ping

    (National Bureau of Statistics of China)

  • Qian, Jinchang

    (National Bureau of Statistics of China)

Abstract

FDI can be an important channel for developing countries’ ability to get access to new technology. The impact of FDI on domestically-owned firms’ technology development is less examined but it is frequently argued that technology externalities or demonstration effects could have a positive impact. Another and so far little examined effect of FDI on technology development in domestically-owned firms is through the impact on competition. We examine the effect of FDI on competition in the Chinese manufacturing sector and the effect of competition on firms’ R&D. Our analysis is conducted on a large dataset including all Chinese large and medium sized firms over the period 1998-2004. Our results show that FDI increases competition but there are no strong indications of competition affecting investments in R&D.

Suggested Citation

  • Lundin, Nannan & Sjöholm, Fredrik & He, Ping & Qian, Jinchang, 2007. "FDI, Market Structure and R&D Investments in China," Working Paper Series 708, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0708
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    References listed on IDEAS

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    Cited by:

    1. Elif Kalayci & Mehmet Teoman Pamukçu, 2011. "Analysis of Foreign Ownership, R&D and Spillovers in Developing Countries: Evidence from Turkey," Working Papers 642, Economic Research Forum, revised 10 Jan 2011.
    2. Tsai Chang-hsien, 2011. "International Jurisdictional Competition under Globalization: From the U.S. Regulation of Foreign Private Issuers to Taiwan's Restrictions on Outward Investment in Mainland China," Asian Journal of Law and Economics, De Gruyter, vol. 2(1), pages 1-102, April.
    3. Dabo Guan & David M. Reiner & Zhu Liu, 2014. "China’s road to a global scientific powerhouse," Cambridge Working Papers in Economics 1447, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    China; FDI; Competition; R&D;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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