FDI, Export Sophistication, and Quality Upgrading: Evidence from China's WTO Accession

Yunong Li, Mengkai Yang and Lianming Zhu

Japan and the World Economy, 2021, vol. 59, issue C

Abstract: This paper identifies a positive effect of FDI liberalization on manufacturing export sophistication, exploiting China’s adjustment of its Catalogue for the Guidance of Foreign Investment Industries upon its accession to WTO. It further investigates the underlying causes in the lines of firm ownership type, trade mode, product type, and intensive vs. extensive margins. The positive effect comes from, e.g., the increase in the export share of foreign-invested enterprises (FIEs) and firms with processing trade, and the increase in the export sophistication of privately-owned enterprises (POEs), of ordinary trade, and of intermediate goods. The intensive margin rather than extensive margin is accountable for the effect. Liberalizing FDI does not seem to have any significant effect on product quality.

Keywords: FDI deregulation; Export sophistication; China (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:59:y:2021:i:c:s0922142521000335

DOI: 10.1016/j.japwor.2021.101086

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