Document Type
Journal article
Source Publication
China Economic Review
Publication Date
12-1-2009
Volume
20
Issue
4
First Page
677
Last Page
691
Keywords
China, Foreign direct investment, Spillovers
Abstract
Using a large panel dataset covering all manufacturing firms (above a minimum Scale) in China from 1998 to 2005, this paper examines whether there exist productivity spillovers from foreign direct investment (FDI) to domestic firms. In estimating productivity, we control for a Possible simultaneity bias by using semi-parametric estimation techniques. We find that Hong Kong, Macao and Taiwan (HMT) invested fit ins generate negative horizontal spillovers, while Non-HMT foreign invested firms (mostly from OECD countries) tend to bring positive horizontal spillovers in China. These two opposing horizontal effects seem to cancel out at the aggregate level. We also find strong and robust vertical spillover effects oil both state-owned firms and non-state firms. However, vertical spillover effects from export-oriented FDI are weaker than those from domestic-market-oriented FDI.
DOI
10.1016/j.chieco.2009.05.010
Print ISSN
1043951X
E-ISSN
18737781
Publisher Statement
Copyright © 2009 Elsevier Inc
Access to external full text or publisher's version may require subscription.
Full-text Version
Pre-print
Language
English
Recommended Citation
Lin, P., Liu, Z., & Zhang, Y. (2009). Do Chinese domestic firms benefit from FDI inflow? Evidence of horizontal and vertical spillovers. China Economic Review, 20(4), 677-691. doi: 10.1016/j.chieco.2009.05.010