What Determines Technological Spillovers of Foreign Direct Investment: Evidence from China

Cheryl Long and Galina Hale

No 28412, Center Discussion Papers from Yale University, Economic Growth Center

Abstract: Using the World Bank survey of 1500 firms in five Chinese cities, we study whether the presence of foreign firms produces technology spillovers on domestic firms operating in the same city and industry. We find positive spillovers for more technologically advanced firms and no or negative spillovers for more backward firms. We analyze the channels of such spillovers and find that the transfer of technology occurs through movement of high-skilled workers from FDI firms to domestic firms as well as through network externalities among high-skilled workers. Moreover, these two channels fully account for the spillover effects we find, which demonstrate the importance of well-functioning labor market in facilitating FDI spillovers. Insofar as our results can be generalized to other countries, they reconcile conflicting evidence found in other studies.

Keywords: International Relations/Trade; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 31
Date: 2006
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Citations: View citations in EconPapers (33)

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Working Paper: What Determines Technological Spillovers of Foreign Direct Investment: Evidence from China (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:yaleeg:28412

DOI: 10.22004/ag.econ.28412

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