TY - JOUR
T1 - How Effective are Investment Promotion Agencies? Evidence from China
AU - Ni, Bin
AU - Todo, Yasuyuki
AU - Inui, Tomohiko
N1 - Funding Information:
We would like to thank Mary Lovely, Sunghoon Chung, Yifan Zhang, Fukunari Kimura, Kozo Kiyota, Toshiyuki Matsuura, Hongyong Zhang and the participants in seminars at Sogang University, Lingnan University, the 5th Spring Meeting of the Japan Society of International Economics and the Keio Seminar in International Trade and Investment for their helpful suggestions. Todo gratefully acknowledges the financial support from the Japan Society for the Promotion of Science (KAKENHI Grant No. 25101003).
Publisher Copyright:
© 2016 Japanese Economic Association
Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2017/6
Y1 - 2017/6
N2 - Using both firm-level and city-level data from the Chinese National Bureau of Statistics and unique information on investment promotion agencies (IPA) in China, the present paper evaluates whether IPA affect foreign direct investment (FDI) from the perspective of both intensive and extensive margins; that is, re-investment by incumbent foreign-owned firms and total new FDI inflows into the city, respectively. After controlling for potential determinants of FDI and correcting for biases due to endogeneity, we find that, in general, IPA do not necessarily increase FDI in either case. However, IPA are found to promote re-investment by large foreign-owned firms. The results imply difficulty in the dissemination of information about the business environment to foreign investors.
AB - Using both firm-level and city-level data from the Chinese National Bureau of Statistics and unique information on investment promotion agencies (IPA) in China, the present paper evaluates whether IPA affect foreign direct investment (FDI) from the perspective of both intensive and extensive margins; that is, re-investment by incumbent foreign-owned firms and total new FDI inflows into the city, respectively. After controlling for potential determinants of FDI and correcting for biases due to endogeneity, we find that, in general, IPA do not necessarily increase FDI in either case. However, IPA are found to promote re-investment by large foreign-owned firms. The results imply difficulty in the dissemination of information about the business environment to foreign investors.
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U2 - 10.1111/jere.12089
DO - 10.1111/jere.12089
M3 - Article
AN - SCOPUS:84963621748
SN - 1352-4739
VL - 68
SP - 232
EP - 243
JO - Japanese Economic Review
JF - Japanese Economic Review
IS - 2
ER -
