Foreign direct investment and technology spillovers in China's manufacturing sector

Sun, Sizhong (2011) Foreign direct investment and technology spillovers in China's manufacturing sector. Chinese Economy, 44 (2). pp. 25-42.

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Abstract

This paper explores the technology spillovers of foreign direct investment in China's manufacturing sector in 2003. Using a simultaneous equation model estimated over a comprehensive firm level data set, we find that the foreign direct investment in China generates significant and positive technology spillovers to domestic firms, with a 1 per cent increase in the foreign presence promoting domestic firms' labour productivity by more than 5 per cent. The substantial positive spillovers not only to some extent justify China's FDI policy setting, but also indicate that China is likely to continue to benefit from attracting more FDI inflow in the future.

Item ID: 8567
Item Type: Article (Refereed Research - C1)
Keywords: FDI; technology spillovers; China
ISSN: 1558-0954
Date Deposited: 24 Feb 2010 00:50
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910203 Industrial Organisations @ 50%
91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910210 Production @ 50%
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