R&D activities and FDI in China's iron ore mining industry

Sun, Sizhong, and Anwar, Sajid (2019) R&D activities and FDI in China's iron ore mining industry. Economic Analysis and Policy, 62. pp. 47-56.

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Abstract

In recent years, the Chinese government has committed additional resources in promoting research and development (R&D). At the same time, China has started implementing a more targeted foreign direct investment (FDI) policy. Using firm level panel data from China's iron ore mining industry, this paper aims to evaluate the performance differences between the firms that undertake R&D and those who do not. We also examine the role of FDI, which has not been the subject of an in-depth investigation. In addition, we use a relatively recently developed coarsened exact matching technique. We find that domestic firms in China's iron ore mining industry that conduct R&D are on average 0.3937% more productive and their sales are 0.0253% higher. While this industry attracts less than 1% of the total FDI in China, FDI has a positive and sizable impact on both productivity and profitability of domestic firms in China's iron ore mining industry. The results presented in this paper suggest that investment in China's iron ore mining industry offers attractive returns to foreign investors.

Item ID: 61805
Item Type: Article (Research - C1)
ISSN: 0313-5926
Keywords: China, coarsened exact matching, FDI, iron ore mining, productivity, R&D spending, sales
Copyright Information: © 2019 Economic Society of Australia, Queensland.
Date Deposited: 20 May 2020 21:57
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140210 International Economics and International Finance @ 50%
14 ECONOMICS > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation @ 50%
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