China's FDI and Non-FDI Economies and the Sustainability of Future High Chinese Growth
This paper presents assesses of the contribution of inward FDI to China%u2019s recent rapid economic growth using a two stage growth accounting approach. Recent econometric literature focuses on testing whether Chinese growth depends on inward FDI rather than measuring the contribution. Foreign Invested Enterprises (FIEs), often (but not exclusively) are joint ventures between foreign companies and Chinese enterprises, and can be thought of as forming a distinctive subpart of the Chinese economy. These enterprises account for over 50% of China%u2019s exports and 60% of China%u2019s imports. Their share in Chinese GDP has been over 20% in the last two years, but they employ only 3% of the workforce, since their average labor productivity exceeds that of Non-FIEs by around 9:1. Their production is more heavily for export rather than the domestic market because FIEs provide access to both distribution systems abroad and product design for export markets. Our decomposition results indicate that China%u2019s FIEs may have contributed over 40% of China%u2019s economic growth in 2003 and 2004, and without this inward FDI, China%u2019s overall GDP growth rate could have been around 3.4 percentage points lower. We suggest that the sustainability of both China%u2019 export and overall economic growth may be questionable if inward FDI plateaus in the future.
|Date of creation:||May 2006|
|Date of revision:|
|Publication status:||published as Whalley, John and Xian Xin. "China's FDI and Non-FDI Economies and the Sustainability of Future High Chinese Growth." China Economic Review 21, 1 (March 2010): 123-135.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harm Zebregs & Wanda S Tseng, 2002. "Foreign Direct Investment in China; Some Lessons for Other Countries," IMF Policy Discussion Papers 02/3, International Monetary Fund.
- Terry Sicular, 1998.
"Capital Flight and Foreign Investment: Two Tales From China and Russia,"
The World Economy,
Wiley Blackwell, vol. 21(5), pages 589-602, 07.
- Terry Sicular, 1998. "Capital Flight and Foreign Investment: Two Tales from China and Russia," UWO Department of Economics Working Papers 9803, University of Western Ontario, Department of Economics.
- Berthelemy, Jean-Claude & Demurger, Sylvie, 2000. "Foreign Direct Investment and Economic Growth: Theory and Application to China," Review of Development Economics, Wiley Blackwell, vol. 4(2), pages 140-55, June.
- Edward M. Graham & Erika Wada, 2001. "Foreign Direct Investment in China: Effects on Growth and Economic Performance," Working Paper Series WP01-3, Peterson Institute for International Economics.
- Martin L. Weitzman, 1968.
"Soviet Postwar Economic Growth and Capital Labor Substitution,"
Cowles Foundation Discussion Papers
256, Cowles Foundation for Research in Economics, Yale University.
- Weitzman, Martin L, 1970. "Soviet Postwar Economic Growth and Capital-Labor Substitution," American Economic Review, American Economic Association, vol. 60(4), pages 676-92, September.
- Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995.
"How Does Foreign Direct Investment Affect Economic Growth?,"
NBER Working Papers
5057, National Bureau of Economic Research, Inc.
- Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
- Stèphane Dees, 1998.
"Foreign Direct Investment in China: Determinants and Effects,"
Economic Change and Restructuring,
Springer, vol. 31(2), pages 175-194, May.
- Dees, Stephane, 1998. "Foreign Direct Investment in China: Determinants and Effects," Economic Change and Restructuring, Springer, vol. 31(2-3), pages 175-94.
- Gregory C. Chow, 1993. "Capital Formation and Economic Growth in China," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 809-842.
- Ting Gao, 2005. "Foreign Direct Investment In China: How Big Are The Roles Of Culture And Geography?," Pacific Economic Review, Wiley Blackwell, vol. 10(2), pages 153-166, 06.
- Wu, Yanrui, 2000. "Measuring the performance of foreign direct investment: a case study of China," Economics Letters, Elsevier, vol. 66(2), pages 143-150, February.
- Rawski, Thomas G., 2001. "What is happening to China's GDP statistics?," China Economic Review, Elsevier, vol. 12(4), pages 347-354.
- Gregory C. Chow, 2003. "Accounting for Economic Growth in Taiwan and Mainland China: A Comparative Analysis," GE, Growth, Math methods 0306003, EconWPA.
- Yingqi Wei & Xiaming Liu & David Parker & Kirit Vaidya, 1999. "The Regional Distribution of Foreign Direct Investment in China," Regional Studies, Taylor & Francis Journals, vol. 33(9), pages 857-867.
- Edwin Mansfield & Anthony Romeo, 1980. "Technology Transfer to Overseas Subsidiaries by U. S.-Based Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 95(4), pages 737-750.
- Branstetter, Lee G. & Feenstra, Robert C., 2002.
"Trade and foreign direct investment in China: a political economy approach,"
Journal of International Economics,
Elsevier, vol. 58(2), pages 335-358, December.
- Lee G. Branstetter & Robert C. Feenstra, 1999. "Trade and Foreign Direct Investment in China: A Political Economy Approach," NBER Working Papers 7100, National Bureau of Economic Research, Inc.
- Alwyn Young, 2000. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," NBER Working Papers 7856, National Bureau of Economic Research, Inc.
- D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
- Fung, K. C. & Iizaka, Hitomi & Siu, Alan, 2003. "Japanese direct investment in China," China Economic Review, Elsevier, vol. 14(3), pages 304-315.
- Stephen Young & Ping Lan, 1997. "Technology Transfer to China through Foreign Direct Investment," Regional Studies, Taylor & Francis Journals, vol. 31(7), pages 669-679.
- Ulrich Kohli, 2003. "GDP Growth Accounting: A National Income Function Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(1), pages 23-34, 03.
- Shang-Jin Wei, 1993.
"Open door policy and China's rapid growth: evidence from city-level data,"
Pacific Basin Working Paper Series
93-09, Federal Reserve Bank of San Francisco.
- Shang-Jin Wei, 1993. "Open Door Policy and China's Rapid Growth: Evidence from City-level Data," NBER Working Papers 4602, National Bureau of Economic Research, Inc.
- Liu, Xiaming & Wang, Chengang & Wei, Yingqi, 2001. "Causal links between foreign direct investment and trade in China," China Economic Review, Elsevier, vol. 12(2-3), pages 190-202.
- repec:idb:brikps:9167 is not listed on IDEAS
- Kohli, Ulrich, 2003. "Growth accounting in the open economy: international comparisons," International Review of Economics & Finance, Elsevier, vol. 12(4), pages 417-435.
- Magnus Blomstrom & Ari Kokko, 1993.
"Policies to Encourage Inflows of Technology Through Foreign Multinationals,"
NBER Working Papers
4289, National Bureau of Economic Research, Inc.
- Kokko, Ari & Blomstrom, Magnus, 1995. "Policies to encourage inflows of technology through foreign multinationals," World Development, Elsevier, vol. 23(3), pages 459-468, March.
- Xiaohui Liu & Peter Burridge & P. J. N. Sinclair, 2002. "Relationships between economic growth, foreign direct investment and trade: evidence from China," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1433-1440.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:12249. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.