Identifying FDI spillovers

Yi Lu, Zhigang Tao, Lianming Zhu

Research output: Contribution to journalArticle

23 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 languageEnglish
Pages (from-to)75-90
Number of pages16
JournalJournal of International Economics
Volume107
DOIs
Publication statusPublished - 2017 Jul 1

Fingerprint

Foreign direct investment
Spillover
Domestic firms
Spillover effects
China
Performance measures
Exporting
Firm survival
World Trade Organization
Accessions
Agglomeration
Total factor productivity
Wages
Absorptive capacity

Keywords

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

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

Identifying FDI spillovers. / Lu, Yi; Tao, Zhigang; Zhu, Lianming.

In: Journal of International Economics, Vol. 107, 01.07.2017, p. 75-90.

Research output: Contribution to journalArticle

Lu, Yi ; Tao, Zhigang ; Zhu, Lianming. / Identifying FDI spillovers. In: Journal of International Economics. 2017 ; Vol. 107. pp. 75-90.
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