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

Yu Sheng, Xinpeng Xu

    Research output: Contribution to journalArticle

    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
    JournalWorld Development
    Volume40
    Issue number1
    DOIs
    Publication statusPublished - 2012

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