The temporal and spatial dynamics of FDI productivity spillovers: A technology gap perspective

Jie Zhang, Jiwei Chen, Guohui Chen and Manlin Zhi

Economic Systems, 2025, vol. 49, issue 3

Abstract: An emerging literature estimates the productivity spillovers of foreign direct investment (FDI), but the temporal and spatial dynamics and the impact of the technology gap on FDI productivity spillover are insufficiently investigated. To provide a more comprehensive estimate for the international policy analysis, the study estimates the effects by utilizing the sample of 53 "Belt and Road" Initiative countries over the period 2003–2020 and captures the temporal and spatial dynamics of FDI productivity spillovers conditional on the technology gap. Moreover, the channels of FDI spillovers on productivity are investigated. The study reveals significant contributions of Chinese outward foreign direct investment (OFDI) -induced spillovers to the host countries' productivity growth by facilitating transformations in industrial and labour structures, alongside optimizing capital allocation. Nonetheless, spillover effects diminish with widening technology gaps, especially when exceeding a certain threshold. Temporal analysis indicates a strengthening trend in productivity spillovers over time. The spatial analysis demonstrates that Chinese OFDI exhibits negative spatial spillover effects, indicating the presence of competitive dynamics in attracting foreign capital.

Keywords: Productivity spillovers; Technology gap; Productivity growth; Temporal and spatial analysis; Chinese outward foreign direct investment (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:49:y:2025:i:3:s0939362525000044

DOI: 10.1016/j.ecosys.2025.101292

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