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How Does the Productivity of Foreign Direct Investment Spill over to Local Firms in Chinese Manufacturing?

  • Adam Blake
  • Ziliang Deng
  • Rod Falvey

We use a firm-level dataset for Chinese manufacturing, to estimate productivity spillovers from foreign direct investment (FDI) to local firms. The spillover channels considered include inter-firm labour turnover/mobility; vertical input-output linkages; exporting externalities; and horizontal effects. The roles of these channels are dependent on various factors including export propensity, R&D expenditure per capita, employee training, and ownership structure. We find that export of MNEs is the most prominent spillover channel. Labour turnover and horizontal demonstration and competition bring positive spillovers to SOEs but not to local private firms. Vertical linkages are not found to be significant.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 09/03.

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Handle: RePEc:not:notgep:09/03
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