How does the Productivity of Foreign Direct Investment spill over to Local Firms in Chinese Manufacturing?

This source preferred by Adam Blake

Authors: Blake, A., Deng, Z. and Falvey, R.

Journal: Journal of Chinese Economic and Business Studies

Volume: 7

Pages: 183-197

ISSN: 1476-5284

DOI: 10.1080/14765280902847676

We use a firm-level dataset for Chinese manufacturing, to estimate productivity spillovers from foreign direct investment (FDI) to local firms. The spillover channels considered include inter-firm labour turnover/mobility; vertical input-output linkages; exporting externalities; and horizontal effects. The roles of these channels are dependent on various factors including export propensity, R&D expenditure per capita, employee training, and ownership structure. We find that export of multinational enterprises (MNEs) is the most prominent spillover channel. Labour turnover and horizontal demonstration and competition bring positive spillovers to SOEs but not to local private firms. Vertical linkages are not found to be significant.

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