Financial deregulation, absorptive capability, technology diffusion and growth: Evidence from Chinese panel data

Qichun He, Meng Sun and Heng-Fu Zou ()
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Meng Sun: Beijing Normal University

Journal of Applied Economics, 2013, vol. 16, 275-302

Abstract: Technological diffusion via FDI is essential for the economic growth of backward economies. However, institutional and policy barriers may slow down technology diffusion. Using a simple theory based on Acemoglu (2009), we predict that inward FDI (pool of available world frontier technologies) and financial deregulation (enhancing absorptive capability via lowering institutional and policy barriers) have a complementary effect on economic growth. We test the predictions using panel data on Chinese provinces during the reform and opening-up period. The Chinese experience is appealing because of the symbiotic financial deregulation and inflow of FDI. We find robust evidence that there is a significant interaction effect between FDI and the level of financial deregulation that promotes economic growth. This furthers our understanding of the reform and opening-up strategy of China.

Keywords: absorptive capability; gradual financial deregulation; inward FDI; interaction; panel data (search for similar items in EconPapers)
JEL-codes: C23 F43 O11 O33 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Financial Deregulation, Absorptive Capability, Technology Diffusion and Growth: Evidence from Chinese Panel Data (2013)
Working Paper: Financial Deregulation, Absorptive Capability, Technology Diffusion and Growth: Evidence from Chinese Panel Data (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:16:y:2013:n:2:p:275-302

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