Export spillover from foreign direct investment in China during pre- and post-WTO accession

Minjung Kim () and Ding Xin

Journal of Asian Economics, 2021, vol. 75, issue C

Abstract: This study investigates the effects of export spillover from foreign direct investment (FDI) before and after China’s World Trade Organization (WTO) accession, with particular consideration of the FDI source country and firm ownership structure. It uses a Chinese manufacturing firm-level panel dataset, for the period 1998–2007. In general, there are no spillover effects among state-owned enterprises (SOEs). This study finds negative horizontal and positive vertical spillovers associated with FDI from Hong Kong, Macao, and Taiwan (HMT) among non-SOEs. Furthermore, non-HMT FDI, which is predominantly from the Organisation for Economic Co-operation and Development (OECD) countries, have statistically significant positive horizontal and vertical spillover effects on the export performance of private Chinese firms. Positive forward spillovers occurred only after China joined the WTO, while positive backward spillovers existed during both the pre- and post-WTO periods. China’s entry into the WTO intensified the forward linkage of production, implying that greater availability of high-quality inputs produced by non-HMT foreign multinationals benefited the export performance of private domestic firms.

Keywords: FDI; Horizontal spillovers; Vertical spillovers; Firm ownership structure; WTO accession (search for similar items in EconPapers)
JEL-codes: F23 L33 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:75:y:2021:i:c:s104900782100066x

DOI: 10.1016/j.asieco.2021.101337

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