FDI Spillovers in History: Interwar Japanese investment in the Chinese cotton industry

Holger Görg, Toshihiro Okubo, Eric Strobl, Maximilian von Ehrlich

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: In this paper we use comprehensive historic firm level data for 1925 to 1938 to estimate productivity spillovers from Japanese textile companies’ affiliates in China (Zaikabo) to local cotton producers in China. We geo-localized firms in order to capture the important role of distance in facilitating productivity spillovers. Our results provide clear evidence for positive productivity spillovers from Zaikabo to local Chinese firms. This goes hand-in-hand with a change in production technology towards greater use of capital (spindles). We also find that spillovers are very localised, being strongest within a radius of up to 10km around the Zaikabo. Furthermore, evidence for spillovers is particularly strong for firms in Shanghai. Our paper is the first to provide evidence for such spillovers from foreign firms in a historical context.

JEL-codes: F23 N65 (search for similar items in EconPapers)
Date: 2025-06
New Economics Papers: this item is included in nep-cna, nep-cse, nep-iaf, nep-sbm and nep-sea
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