Resource title

FDI and Spillovers in China - Non-linearity and Absorptive Capacity

Resource image

image for OpenScout resource :: FDI and Spillovers in China - Non-linearity and Absorptive Capacity

Resource description

Using a fixed effect variance decomposition model, we estimate SUR models to analyze FDI spillovers from contagion and spillovers from competition on local firms in China. While the former type of spillover mainly depends on the degree of foreign presence in the local industry, the latter kind is related to how foreign and local firms interact. The main conclusion is that FDI has been beneficial for the Chinese economy, but that spillovers are not evenly distributed across firms and industries. Spillovers from contagion tend to exhibit an inverse U-shaped pattern with respect to the degree of foreign presence at the industry level, whereas spillovers from competition are more linear with respect to the level of technological sophistication of foreign firms. Industries with high absorptive capacity and/or high efficiency are the ones best equipped to take advantage of spillovers from foreign-owned firms. Moreover, there are signs of substantial competition between foreign-owned firms.

Resource author

Taotao Chen, Ari Kokko, Patrik Gustavsson Tingvall

Resource publisher

Resource publish date

Resource language

eng

Resource content type

application/pdf

Resource resource URL

http://hdl.handle.net/10398/8033

Resource license

Check the according license before adaptation. When adapting give credits to the original author.