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FDI spillovers and firm ownership in China: labor markets and backward linkages

Galina Hale and Cheryl Long

No 2006-25, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Using firm?level data, we find that the presence of foreign firms in China is positively associated with the performance of domestically owned private firms but is negatively associated with the performance of state?owned enterprises (SOEs). In particular, we find: (1) the presence of foreign direct investment (FDI) is associated with larger differences in the wages and the quality of skilled workers between SOEs and private firms; and, (2) FDI presence is positively associated with private firms? sales to foreign firms and foreign consumers, but not with the sales of SOEs. We argue that these differences could be due to the fact that private firms have more flexible wage and personnel policies, which allows them to attract talent that facilitates positive FDI spillovers.

Keywords: Investments, Foreign; China (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cna, nep-dev, nep-eff, nep-sea and nep-tra
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Handle: RePEc:fip:fedfwp:2006-25