FDI technology spillovers, geography, and spatial diffusion

Mi Lin and Yum K. Kwan

International Review of Economics & Finance, 2016, vol. 43, issue C, 257-274

Abstract: This paper investigates the geographic extent of FDI technology spillovers and associated spatial diffusion. By adopting a spatiotemporal autoregressive panel model as the platform of our study, the complex impact resulting from FDI penetration is separated into spatial direct and indirect effects while accounting for feedback loops among regions. A set of spatially partitioned summary measures is produced to identify and to quantify FDI spillovers from different channels with distinct geographic scopes. Empirical results based on data from China document that the direct impacts of FDI presence to a specific location itself are likely to be negative. Domestic firms mainly benefit from FDI presence in their neighboring regions through knowledge spillovers that have wider geographic scope. Negative market stealing effect nevertheless has no spatial boundary. Policy implications of these findings are discussed.

Keywords: FDI spillovers; Spatial diffusion; Geography; Spatial dynamic panel; Chinese economy (search for similar items in EconPapers)
JEL-codes: F21 O33 R12 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:43:y:2016:i:c:p:257-274

DOI: 10.1016/j.iref.2016.02.014

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