IDEAS home Printed from https://ideas.repec.org/p/ris/adbrei/0120.html
   My bibliography  Save this paper

FDI Technology Spillovers and Spatial Diffusion in the People’s Republic of China

Author

Listed:
  • Lin, Mi

    (University of Lincoln)

  • Kwan, Yum K.

    (Department of Economics & Finance, City University of Hong Kong)

Abstract

This paper investigates the geographic extent of foreign direct investment (FDI) technology spillovers and diffusion in the People’s Republic of China (PRC). We employ spatial dynamic panel econometric techniques to detect total factor productivity (TFP) innovation clusters, uncover the spatial extent of technology diffusion, and quantify both the temporal and spatial dimensions of FDI spillovers. Our empirical results show that FDI presence (measured as employment share) in a locality will generate negative and significant impacts on the productivity performance of domestic private firms in the same location. Nevertheless, these negative intra-regional spillovers are found to be locally bounded. Domestic private firms enjoy positive FDI spillovers through interregional technology diffusion via labor market channels; these interregional spillovers appear in spatial feedback loops among higher-order neighboring regions. In the long run, the positive interregional spillovers outweigh the negative intra-regional spillovers, bestowing beneficiary total effects on domestic firms through labor market channels. FDI spillovers measured as sales income share, however, are negative in both intra-regional and interregional dimensions.

Suggested Citation

  • Lin, Mi & Kwan, Yum K., 2013. "FDI Technology Spillovers and Spatial Diffusion in the People’s Republic of China," Working Papers on Regional Economic Integration 120, Asian Development Bank.
    • Handle: RePEc:ris:adbrei:0120
    as

    Download full text from publisher

    File URL: http://aric.adb.org/pdf/workingpaper/WP120_Lin_Kwan_FDI_Technology_Spillovers.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Park, Cyn-Young & Majuca, Ruperto & Yap, Josef, 2010. "The 2008 Financial Crisis and Potential Output in Asia: Impact and Policy Implications," Working Papers on Regional Economic Integration 45, Asian Development Bank.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hamanaka, Shintaro, 2010. "Institutional Parameters of a Region-Wide Economic Agreement in Asia: Examination of Trans-Pacific Partnership and ASEAN+α Free Trade Agreement Approaches," Working Papers on Regional Economic Integration 67, Asian Development Bank.
    2. Nesadurai, Helen E.S., 2010. "Labor and Grassroots Civic Interests In Regional Institutions," Working Papers on Regional Economic Integration 63, Asian Development Bank.
    3. Hix, Simon, 2010. "Institutional Design of Regional Integration: Balancing Delegation and Representation," Working Papers on Regional Economic Integration 64, Asian Development Bank.
    4. Nasir, Shahbaz & Kalirajan, Kaliappa, 2014. "Modern Services Export Performances among Emerging and Developed Asian Economies," Working Papers on Regional Economic Integration 143, Asian Development Bank.
    5. Hamanaka, Shintaro, 2014. "World Trade Organization Agreement on Trade Facilitation: Assessing the Level of Ambition and Likely Impacts," Working Papers on Regional Economic Integration 138, Asian Development Bank.
    6. Lee, Hyun-Hoon & Park, Donghyun & Wang, Jing, 2011. "The Role of the People’s Republic of China in International Fragmentation and Production Networks: An Empirical Investigation," Working Papers on Regional Economic Integration 87, Asian Development Bank.
    7. Shinozaki, Shigehiro, 2014. "Capital Market Financing for SMEs: A Growing Need in Emerging Asia," Working Papers on Regional Economic Integration 121, Asian Development Bank.
    8. Voeten, Erik, 2010. "Regional Judicial Institutions and Economic Cooperation: Lessons for Asia?," Working Papers on Regional Economic Integration 65, Asian Development Bank.
    9. Wang, Yong, 2010. "Evolving Asian Power Balances and Alternate Conceptions for Building Regional Institutions," Working Papers on Regional Economic Integration 68, Asian Development Bank.
    10. Hill, Hal & Menon, Jayant, 2014. "Trade Policy Challenges in a Small, Open, Fragile, Postconflict Economy: Cambodia," Working Papers on Regional Economic Integration 141, Asian Development Bank.
    11. Estrada, Gemma & Park, Donghyun & Park, Innwon & Park, Soonchan, 2011. "ASEAN’s Free Trade Agreements with the People’s Republic of China, Japan, and the Republic of Korea: A Qualitative and Quantitative Analysis," Working Papers on Regional Economic Integration 75, Asian Development Bank.
    12. Cheong, David, 2010. "Methods for Ex Ante Economic Evaluation of Free Trade Agreements," Working Papers on Regional Economic Integration 52, Asian Development Bank.
    13. Han, Fei & Hee Ng, Thiam, 2011. "ASEAN-5 Macroeconomic Forecasting Using a GVAR Model," Working Papers on Regional Economic Integration 76, Asian Development Bank.
    14. Cyn‐Young PARK & Jong‐Wha LEE, 2011. "Financial Integration in Emerging Asia: Challenges and Prospects," Asian Economic Policy Review, Japan Center for Economic Research, vol. 6(2), pages 176-198, December.
    15. Hill, Hal & Menon, Jayant, 2010. "ASEAN Economic Integration: Features, Fulfillments, Failures and the Future," Working Papers on Regional Economic Integration 69, Asian Development Bank.
    16. Dieter, Heribert, 2014. "The End of Grand Expectations: Monetary and Financial Integration After the Crisis in Europe," Working Papers on Regional Economic Integration 127, Asian Development Bank.
    17. Hong, Kiseok & Tang, Hsiao Chink, 2010. "Crises in Asia: Recovery and Policy Responses," Working Papers on Regional Economic Integration 48, Asian Development Bank.
    18. Takagi, Shinji, 2010. "Regional Surveillance for East Asia: How Can It Be Designed to Complement Global Surveillance?," Working Papers on Regional Economic Integration 50, Asian Development Bank.
    19. Baldwin, Richard, 2010. "Sequencing regionalism: Theory, European practice, and lessons for Asia," CEPR Discussion Papers 7852, C.E.P.R. Discussion Papers.
    20. Khadiagala, Gilbert M., 2011. "Institution Building for African Regionalism," Working Papers on Regional Economic Integration 85, Asian Development Bank.

    More about this item

    Keywords

    FDI spillovers; spatial diffusion; spatial dynamic panel; PRC economy;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:adbrei:0120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ivan B. de Leon (email available below). General contact details of provider: https://edirc.repec.org/data/oradbph.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.