Quantifying foreign direct investment productivity spillovers in China: A computable general equilibrium model

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

Pages: 369-389

eISSN: 1467-8381

ISSN: 1351-3958

DOI: 10.1111/asej.12019

Abstract:

For the purposes of this study, we will construct a static monopolistically-competitive computable general equilibrium model to quantify the endogenous productivity spillovers from foreign and domestic firms, using the Chinese economy as a case study. Our simulation results indicate: (i) that the net spillover effects are positive in terms of national total output, GDP and welfare; (ii) that both state-owned and privately-owned firms benefit, but that private firms benefit more; (iii) that industries with large volumes of foreign direct investment (FDI) do not necessarily observe the largest spillover effects; and (iv) that the spillover effects become more prominent when the initial market structure is more concentrated. © 2013 East Asian Economic Association and Wiley Publishing Asia Pty Ltd.

Source: Scopus