FDI Technology Spillovers and Spatial Diffusion in the People’s Republic of China

Mi Lin and Yum K. Kwan ()
Additional contact information
Yum K. Kwan: Department of Economics & Finance, City University of Hong Kong, Postal: Tat Chee Avenue, Kowloon, Hong Kong, China

No 120, Working Papers on Regional Economic Integration from Asian Development Bank

Abstract: This paper investigates the geographic extent of foreign direct investment (FDI) technology spillovers and diffusion in the People’s Republic of China (PRC). We employ spatial dynamic panel econometric techniques to detect total factor productivity (TFP) innovation clusters, uncover the spatial extent of technology diffusion, and quantify both the temporal and spatial dimensions of FDI spillovers. Our empirical results show that FDI presence (measured as employment share) in a locality will generate negative and significant impacts on the productivity performance of domestic private firms in the same location. Nevertheless, these negative intra-regional spillovers are found to be locally bounded. Domestic private firms enjoy positive FDI spillovers through interregional technology diffusion via labor market channels; these interregional spillovers appear in spatial feedback loops among higher-order neighboring regions. In the long run, the positive interregional spillovers outweigh the negative intra-regional spillovers, bestowing beneficiary total effects on domestic firms through labor market channels. FDI spillovers measured as sales income share, however, are negative in both intra-regional and interregional dimensions.

Keywords: FDI spillovers; spatial diffusion; spatial dynamic panel; PRC economy (search for similar items in EconPapers)
JEL-codes: F21 O33 R12 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2013-11-01
New Economics Papers: this item is included in nep-cse, nep-geo, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://aric.adb.org/pdf/workingpaper/WP120_Lin_Kwa ... ology_Spillovers.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbrei:0120

Access Statistics for this paper

More papers in Working Papers on Regional Economic Integration from Asian Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Ivan B. de Leon ().