Productivity Spillovers from Foreign Direct Investment: Firm-Level Evidence from China

Xinpeng Xu, Yu Sheng

Research output: Journal article publicationJournal articleAcademic researchpeer-review

62 Citations (Scopus)

Abstract

Using firm-level census data, this paper examines the spillover effects of foreign direct investment (FDI) on domestic firms in the Chinese manufacturing industry between 2000 and 2003. Our analysis takes into account the endogeniety of input choices, simultaneity bias, and clustering errors that are known to cause biased and inefficient estimations. Our results suggest that positive spillovers from FDI arise from forward linkages where domestic firms purchase high-quality intermediate goods or equipment from foreign firms in the upstream sectors. Our results also show that domestic firms differ significantly in the extent to which they benefit from FDI.
Original languageEnglish
Pages (from-to)62-74
Number of pages13
JournalWorld Development
Volume40
Issue number1
DOIs
Publication statusPublished - 1 Jan 2012

Keywords

  • Asia
  • China
  • Foreign direct investment
  • Spillover effects

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Sociology and Political Science
  • Economics and Econometrics

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