How do Chinese industries benefit from FDI spillovers?

Banri Ito, Naomitsu Yashiro, Zhaoyuan Xu, XiaoHong Chen and Ryuhei Wakasugi ()

China Economic Review, 2012, vol. 23, issue 2, 342-356

Abstract: Recently, Foreign Invested Enterprises (FIEs) in China have increased their investment in not only production activity but also R&D activity. This paper examines the impact of spillovers from such activities by FIEs on two types of innovations by Chinese domestic firms: Total Factor Productivity (TFP) and invention patent application, using comprehensive industry and province-level data. We evaluate such spillovers according to FIEs' ownership structure, the origin of foreign funds and whether they are from the same industry or from other industries. We find an interesting asymmetry between spillovers to TFP and invention patent applications; while we do not find significant intra-industry spillovers from FIEs but find robust inter-industries spillover related to TFP, we find substantial intra-industry spillovers promoting invention patent applications but no evidence of inter-industries spillovers. Furthermore, whereas spillovers from FIEs to Chinese firms' TFP stem from their production activities, the source of spillovers related to invention patent applications is mostly through their R&D activity. Our findings indicate a need for multidimensional evaluation of the role of FDI in developing countries.

Keywords: China; FDI spillovers; R&D; Innovation (search for similar items in EconPapers)
JEL-codes: F23 F43 O33 O47 O53 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

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Working Paper: How Do Chinese Industries Benefit from FDI Spillovers? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:23:y:2012:i:2:p:342-356

DOI: 10.1016/j.chieco.2012.02.001

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