Outward FDI and Domestic Input Distortions: Evidence from Chinese Firms

Cheng Chen, Wei Tian () and Miaojie Yu
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Wei Tian: University of International Business and Economics, Beijing

No dp-278, Boston University - Department of Economics - The Institute for Economic Development Working Papers Series from Boston University - Department of Economics

Abstract: This paper examines how domestic distortions a ect firms’ investment strategies abroad. The study first documents puzzling empirical findings concerning Chinese multina- tional corporations, which include that private multinational corporations are less productive than state-owned multinational corporations. A theoretical model is built to rationalize these findings and yields additional empirically consistent predictions. The key insight is that dis- crimination against private firms domestically incentivizes these firms to produce abroad, which results in less tough selection into foreign direct investment for them. A calibra- tion exercise shows the quantitative impacts of domestic distortions on gains in aggregate productivity after investment liberalization.

Keywords: Outward FDI; Multinational Firms; Institutional Distortion; State-owned Enterprises (search for similar items in EconPapers)
JEL-codes: F13 O11 P51 (search for similar items in EconPapers)
Pages: 54
New Economics Papers: this item is included in nep-bec, nep-cna and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Outward FDI and Domestic Input Distortions: Evidence from Chinese Firms (2019)
Working Paper: Outward FDI and domestic input distortions: Evidence from Chinese firms (2015)
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