Impact of FDI on Domestic Firms' Exports in China

Yu Sheng (), Chunlai Chen and Christopher Findlay

No 2011-15, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: Using manufacturing industry firm-level census data from the period of 2000-2003 in China, this paper examines the impact of foreign direct investment on domestic firms' exports. After dealing with econometric problems of endogeneity and sample selection, we find that foreign direct investment in China has had a positive impact on domestic firms' export value through backward industrial linkages and a positive impact on domestic firms' export propensities in the same industry through demonstration effects. In particular, non-exporting FDI firms and FDI firms producing homogeneous products are more likely to generate the positive export spillovers to domestic firms through industrial linkages while exporting FDI firms and FDI firms producing heterogeneous products are more likely to generate positive export spillovers to domestic firms through demonstration effects in the same industry.

Keywords: Foreign Direct Investment; export spillovers; industrial linkage (search for similar items in EconPapers)
JEL-codes: F14 F23 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011-03
New Economics Papers: this item is included in nep-dev, nep-int, nep-sbm and nep-tra
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2011-15

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