Economics at your fingertips  

Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode

George Chen (), Yao Yao and Julien Malizard ()

Economic Modelling, 2017, vol. 61, issue C, 409-419

Abstract: Using quarterly data spanning from 1994Q1 to 2014Q4, we find a neutral relationship between foreign direct investment (FDI) and domestic investment in China. However, when we consider the entry mode chosen by foreign investors, we find that whilst equity joint venture (EJV) crowds in domestic investment, wholly foreign-funded enterprise (WFFE) crowds it out. Our results remain robust under alternative estimators and across different time periods. Based on these results, we argue that the Chinese government needs to actively promote the formation of EJV and uses it as the catalyst for industrial upgrading in the economy.

Keywords: Foreign direct investment; Entry mode; ARDL bounds test; Domestic investment; China (search for similar items in EconPapers)
JEL-codes: E22 F23 O53 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
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:

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-03-17
Handle: RePEc:eee:ecmode:v:61:y:2017:i:c:p:409-419