EconPapers    
Economics at your fingertips  
 

Testing for horizontal and vertical foreign investment spillovers in China, 1998–2007

Luosha Du, Ann Harrison () and Gary H. Jefferson

Journal of Asian Economics, 2012, vol. 23, issue 3, 234-243

Abstract: As with many developing countries, the Chinese government hopes that knowledge brought by multinationals will spill over to domestic industries and increase their productivity. In this paper, we show that foreign investment originating outside of Hong Kong, Macau, and Taiwan has positive effects on individual firm level productivity, while foreign investment from HKMT firms does not. We also test for both horizontal (within the same industry) and vertical (upstream or downstream) linkages from foreign investment. Using a manufacturing firm-level panel for 1998 through 2007, we find zero or weak positive horizontal externalities. However, our results show that foreign direct investment (FDI) has generated positive productivity spillovers to domestic firms via backward linkages (the contacts between foreign affiliates and their local suppliers in downstream sectors) as well as forward linkages (between foreign suppliers and their local buyers in the upstream sectors).

Keywords: Foreign direct investment; Horizontal spillover effect; Backward and forward linkages; China's manufacturing industries (search for similar items in EconPapers)
JEL-codes: F2 L6 O1 O3 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1049007811000029
Full text for ScienceDirect subscribers only

Related works:
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:eee:asieco:v:23:y:2012:i:3:p:234-243

DOI: 10.1016/j.asieco.2011.01.001

Access Statistics for this article

Journal of Asian Economics is currently edited by C. Wiemer

More articles in Journal of Asian Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-10-12
Handle: RePEc:eee:asieco:v:23:y:2012:i:3:p:234-243