FDI Spillovers in the Chinese Manufacturing Sector: Evidence of firm heterogeneity

Filip Abraham, Jozef Konings and Veerle Slootmaekers
Authors registered in the RePEc Author Service: Veerle Miranda

No 6573, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use a new longitudinal data set of more than 15,000 Chinese manufacturing plants to show that the direct and indirect effects of foreign direct investment on measured firm level productivity depend on a number of firm specific features and institutional factors. We find that domestic firms engaged in a joint-venture with a foreign partner are on average more productive, as well as exporting plants and plants located in special economic zones. In addition, domestic firms benefit from horizontal spillovers from foreign firms on average. However, these spillovers depend on the structure and origin of ownership as well as on specific characteristics of the special economic zones. First, spillovers are less likely to occur from fully foreign owned firms than from joint-ventures. Second, spillovers from foreign direct investment originating from oversees Chinese (Hong Kong, Macau and Taiwan) are stronger than from the rest of the world. Third, spillovers are higher in the special economic zone aimed at attracting foreign capital to fasten the development of China?s own high tech industries.

Keywords: China; Firm heterogeneity; Productivity; Spillovers (search for similar items in EconPapers)
JEL-codes: F21 L2 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-cna, nep-eff and nep-tra
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Citations: View citations in EconPapers (17)

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