Identifying FDI spillovers

Yi Lu; Zhigang Tao; Lianming Zhu

doi:10.1016/j.jinteco.2017.01.006

Identifying FDI spillovers

Yi Lu, Zhigang Tao^*, Lianming Zhu

^*Corresponding author for this work

Institute for Research in Contemporary Political and Economic Affairs

Research output: Contribution to journal › Article › peer-review

227 Citations (Scopus)

Abstract

This paper improves on the strategy used in the literature to identify the spillover effect of horizontal foreign direct investment (FDI) by taking advantage of the plausibly exogenous relaxation of FDI regulations on China's World Trade Organization accession at the end of 2001. In addition, to understand the (aggregate) FDI spillover effect, the paper evaluates two underlying explanations (the agglomeration effect versus the competition effect, the former of which is further moderated by the absorptive capacity of domestic firms) by distinguishing different types of FDI along various dimensions. Finally, the analysis uses an array of performance measures, including total factor productivity, exporting performance, wages, R&D investment, and firm survival, with one single data set to offer a fuller and more nuanced picture of the impact of FDI on domestic firms.

Original language	English
Pages (from-to)	75-90
Number of pages	16
Journal	Journal of International Economics
Volume	107
DOIs	https://doi.org/10.1016/j.jinteco.2017.01.006
Publication status	Published - 2017 Jul 1

Keywords

Absorptive capacity
Agglomeration effect
China
Competition effect
Difference-in-differences
FDI spillovers

ASJC Scopus subject areas

Finance
Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.jinteco.2017.01.006

Cite this

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title = "Identifying FDI spillovers",

abstract = "This paper improves on the strategy used in the literature to identify the spillover effect of horizontal foreign direct investment (FDI) by taking advantage of the plausibly exogenous relaxation of FDI regulations on China's World Trade Organization accession at the end of 2001. In addition, to understand the (aggregate) FDI spillover effect, the paper evaluates two underlying explanations (the agglomeration effect versus the competition effect, the former of which is further moderated by the absorptive capacity of domestic firms) by distinguishing different types of FDI along various dimensions. Finally, the analysis uses an array of performance measures, including total factor productivity, exporting performance, wages, R&D investment, and firm survival, with one single data set to offer a fuller and more nuanced picture of the impact of FDI on domestic firms.",

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T1 - Identifying FDI spillovers

AU - Lu, Yi

AU - Tao, Zhigang

AU - Zhu, Lianming

PY - 2017/7/1

Y1 - 2017/7/1

N2 - This paper improves on the strategy used in the literature to identify the spillover effect of horizontal foreign direct investment (FDI) by taking advantage of the plausibly exogenous relaxation of FDI regulations on China's World Trade Organization accession at the end of 2001. In addition, to understand the (aggregate) FDI spillover effect, the paper evaluates two underlying explanations (the agglomeration effect versus the competition effect, the former of which is further moderated by the absorptive capacity of domestic firms) by distinguishing different types of FDI along various dimensions. Finally, the analysis uses an array of performance measures, including total factor productivity, exporting performance, wages, R&D investment, and firm survival, with one single data set to offer a fuller and more nuanced picture of the impact of FDI on domestic firms.

AB - This paper improves on the strategy used in the literature to identify the spillover effect of horizontal foreign direct investment (FDI) by taking advantage of the plausibly exogenous relaxation of FDI regulations on China's World Trade Organization accession at the end of 2001. In addition, to understand the (aggregate) FDI spillover effect, the paper evaluates two underlying explanations (the agglomeration effect versus the competition effect, the former of which is further moderated by the absorptive capacity of domestic firms) by distinguishing different types of FDI along various dimensions. Finally, the analysis uses an array of performance measures, including total factor productivity, exporting performance, wages, R&D investment, and firm survival, with one single data set to offer a fuller and more nuanced picture of the impact of FDI on domestic firms.

KW - Absorptive capacity

KW - Agglomeration effect

KW - China

KW - Competition effect

KW - Difference-in-differences

KW - FDI spillovers

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Identifying FDI spillovers

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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