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The Effects of Foreign Direct Investment on Regional Innovation Capacity in China

Paul J.J. Welfens () and Tian Xiong ()
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Paul J.J. Welfens: Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)
Tian Xiong: Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)

No disbei247, EIIW Discussion paper from Universitätsbibliothek Wuppertal, University Library

Abstract: Foreign direct investment (FDI) has been widely considered as an essential channel contributing to a host countries’ innovation development through knowledge and skill spillover effects. In recent years, China has become the second biggest FDI recipient in the world and continues to promote its domestic innovation ability. Here, the question of how FDI affect the growth of regional innovation in China is posed. By applying an alternative knowledge production function (KPF), we investigate the effects of FDI on the development of self-innovation capacities in 31 Chinese provinces using a fixed-effects specification panel data analysis covering the period from 2000 to 2015. Our findings on the contribution of FDI to the growth of different kinds of patent applications in different regions are mixed. Significant results were mainly found for invention patents in the eastern region. Concluding, we suggest potential policy implementations.

Keywords: Regional Innovation Capacity; Patent; Foreign Direct Investment; China (search for similar items in EconPapers)
JEL-codes: O33 O34 F21 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-cse, nep-fdg, nep-geo, nep-ino, nep-int, nep-ipr, nep-sbm and nep-tra
Date: 2018-06
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