Spillover Effect of FDI on Food Exports: Based on Firm-Level Analysis in China

Yue Jin, Chen Chen and Zhanyi Shi
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Yue Jin: Department of Agricultural Economics and Management, School of Management, 866 Yuhangtang Road, Zhejiang University, Hangzhou 310058, China
Chen Chen: Department of Agricultural Economics and Management, School of Public Affairs, 866 Yuhangtang Road, Zhejiang University, Hangzhou 310058, China
Zhanyi Shi: Department of Agricultural Economics and Management, School of Public Affairs, 866 Yuhangtang Road, Zhejiang University, Hangzhou 310058, China

Sustainability, 2021, vol. 13, issue 9, 1-20

Abstract: This paper examines the spillover effect of foreign direct investment (FDI) on Chinese domestic food exports under firm heterogeneity. By using a rich firm-level panel data of China’s food firms, the empirical analyses rely on the first-order difference generalized method of moments (GMM) for industry-level analysis, and Heckman’s two-stage method for firm-level analysis. The results show that the horizontal FDI led to a positive spillover effect on domestic food industry exports, varying across food subindustries. The paper also finds that a large part of the promotion effect is driven through extensive margin (the probability to export) instead of intensive margin (the quantities of exports) in firm-level analysis. The heterogeneous export spillovers across food firms are further considered to depend on their nature characteristics, like productivity, size, and ownership. Moreover, the heterogeneities of FDI origins and business purpose are confirmed to influence export spillovers. The estimation results are quite robust for different types of regression specifications and substitutions of variable measurement. These findings provide suggestions for decision-makers to carefully assess the impact of FDI and make policy for the sustainable development of domestic food exports.

Keywords: FDI; export spillover; heterogeneous firms; food export growth (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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