Foreign Direct Investment in China: Reward or Remedy?
Olena Havrylchyk and
Sandra Poncet ()
The World Economy, 2007, vol. 30, issue 11, 1662-1681
Abstract:
This paper tests the significance of FDI as a way to alleviate credit constraints. Incoming foreign investment provides additional sources of capital. Specifically in the Chinese case, enterprises may look for foreign investors, being constrained in their activity due to distortions in the state‐dominated system. First, the Chinese financial system allocates resources to the least efficient firms – state‐owned enterprises – while denying the same resources to Chinese private enterprises, forcing them to look for a foreign investor. Second, the inefficient system of state investment planning leads to mismanagement of public enterprises, increasing ‘insolvency‐induced FDI’. We propose to analyse determinants of FDI in Chinese provinces to test the above hypotheses. We control for traditional determinants of FDI such as market access, labour costs, productivity, infrastructure, reform advances and banking sector size in order to assess the impact of inter‐provincial heterogeneity in terms of the access that private enterprises have to credit and the distortive management in state‐owned firms.
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)
Downloads: (external link)
https://doi.org/10.1111/j.1467-9701.2007.01076.x
Related works:
Working Paper: Foreign Direct Investment in China: Reward or Remedy? (2007)
Working Paper: Foreign Direct Investment in China: Reward or Remedy? (2007)
Working Paper: Foreign Direct Investment in China: Reward or Remedy? (2006) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:30:y:2007:i:11:p:1662-1681
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0378-5920
Access Statistics for this article
The World Economy is currently edited by David Greenaway
More articles in The World Economy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().