Spatial spillovers from FDI agglomeration: evidence from the Yangtze River Delta in China

Kiyoyasu Tanaka and Yoshihiro Hashiguchi

No 354, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Foreign firms have clustered together in the Yangtze River Delta, and their impact on domestic firms is an important policy issue. This paper studies the spatial effect of FDI agglomeration on the regional productivity of domestic firms, using Chinese firm-level data. To identify local FDI spillovers, we estimate the causal impact of foreign firms on domestic firms in the same county and similar industries. We then estimate a spatial-autoregressive model to examine spatial spillovers from FDI clusters to other domestic firms in distant counties. Our results show that FDI agglomeration generates positive spillovers for domestic firms, which are stronger in nearby areas than in distant areas.

Keywords: China; Foreign investments; International business enterprises; Productivity; FDI; Multinational firms; Spillovers (search for similar items in EconPapers)
JEL-codes: C21 F21 F23 R12 R58 (search for similar items in EconPapers)
Date: 2012-06-01
New Economics Papers: this item is included in nep-cse, nep-eff, nep-geo, nep-sbm, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 354. 2012-06-01

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