Are investment promotion agencies doing the right thing? evidence from China

Bin Ni ()
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Bin Ni: Waseda University

Economics Bulletin, 2016, vol. 36, issue 3, 1325-1336

Abstract: This paper tries to verify how the establishment of investment promotion agencies (IPAs) affects the decisions of foreign firms regarding their subsequent investment by combining firm-level data from the World Bank's Enterprise Survey with city-level information on (IPAs) in China. After correcting for potential endogeneity problems, the result confirms the IPAs' role in promoting incremental foreign direct investment (FDI) into China. Furthermore, it is shown that Hong Kong, Macau, and Taiwan (HMT) firms are less sensitive to IPAs' efforts in making further investment than are non-HMT foreign firms. In addition, IPAs are found to be more successful in enhancing foreign firms' investment in high-tech than in low-tech industries.

Keywords: China; investment promotion agency; firm-level data; sample selection (search for similar items in EconPapers)
JEL-codes: C3 F0 (search for similar items in EconPapers)
Date: 2016-07-08
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