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Investment Liberalisation, Technology Take-off and Export Market Entry: Does Foreign Ownership Structure Matter?

Author

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  • Girma, Sourafel

    (University of Nottingham)

  • Gong, Yundan

    (Aston University)

  • Görg, Holger

    (Kiel Institute for the World Economy)

  • Lancheros, Sandra

    (University of Nottingham)

Abstract

Before and after its accession to the WTO in 2001, China has undergone a far-reaching investment liberalisation. As part of this, existing restrictions on foreign ownership structure and mandatory export and technology transfer requirements imposed on foreign firms have been lifted in a number of industries. Against this background we identify the causal effects of foreign acquisitions on export market entry and technology take-off and evaluate whether the level of foreign ownership plays a role in stimulating these changes. Using doubly robust propensity score reweighted bivariate probit regressions to control for the selection bias associated with firm level foreign acquisition incidences, we uncover strong but heterogeneous positive effects on export activity for all types of foreign ownership structure. We also find that minority foreign owned acquisition targets experience higher likelihood of R&D, providing evidence that joint ventures can contribute positively to China's "science and technology take-off".

Suggested Citation

  • Girma, Sourafel & Gong, Yundan & Görg, Holger & Lancheros, Sandra, 2015. "Investment Liberalisation, Technology Take-off and Export Market Entry: Does Foreign Ownership Structure Matter?," IZA Discussion Papers 8997, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8997
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    Cited by:

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    2. Görg Holger & Marchal Léa, 2019. "Die Effekte deutscher Direktinvestitionen im Empfängerland vor dem Hintergrund des Leistungsbilanzüberschusses: Empirische Evidenz mit Mikrodaten für Frankreich," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(1), pages 53-69, June.
    3. Genthner, Robert & Kis-Katos, Krisztina, 2022. "Foreign investment regulation and firm productivity: Granular evidence from Indonesia," Journal of Comparative Economics, Elsevier, vol. 50(3), pages 668-687.
    4. Léa Marchal & Clément Nedoncelle, 2019. "Immigrants, occupations and firm export performance," Review of International Economics, Wiley Blackwell, vol. 27(5), pages 1480-1509, November.
    5. Guopei Fang & Holger Görg & Aoife Hanley & Haiou Mao, 2022. "Foreign Divestment – Crisis or Chance for China's Innovation Edge?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(6), pages 1-33, November.
    6. Sourafel Girma & Holger Görg & Erasmus Kersting, 2019. "Which boats are lifted by a foreign tide? Direct and indirect wage effects of foreign ownership," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(6), pages 923-947, August.
    7. Wang, Hao & Fidrmuc, Jan & Luo, Qi, 2021. "A spatial analysis of inward FDI and urban–rural wage inequality in China," Economic Systems, Elsevier, vol. 45(3).
    8. García-Vega, María & Huergo, Elena, 2019. "The role of international and domestic R&D outsourcing for firm innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 775-792.
    9. Prabal K. De & Priya Nagaraj, 2017. "Effects of foreign equity participation on recipient firm exports," Applied Economics, Taylor & Francis Journals, vol. 49(31), pages 3100-3113, July.
    10. Massini, Silvia & Piscitello, Lucia & Shevtsova, Yevgeniya, 2023. "The complementarity effect of exporting, importing and R&D on the productivity of Ukrainian MNEs," International Business Review, Elsevier, vol. 32(3).
    11. Castellani, Davide & Fassio, Claudio, 2017. "Export innovation: The role of new imported inputs and multinationality," Papers in Innovation Studies 2017/16, Lund University, CIRCLE - Centre for Innovation Research.
    12. Meyer, Birgit, 2020. "How deep is your love? Innovation, Upgrading and the Depth of Internationalization," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224584, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    propensity score reweighting; China; FDI; investment liberalization; doubly robust estimation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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