Intra-industry knowledge spillovers from foreign direct investment in research and development: Evidence from China's "Silicon Valley"

Yasuyuki Todo, Weiying Zhang, Lei An Zhou

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16 Citations (Scopus)


This study examines a specific channel of technology diffusion from multinational enterprises to domestic firms in less developed regions: research and development (R&D) activities of multinational enterprises in the host country. Using firm-level panel data from a Chinese science park, known as China's "Silicon Valley," we find that the R&D stock of foreign-owned firms has a positive effect on the productivity of domestic firms in the same industry, while the capital stock of foreign firms has no such effect. These results suggest that foreign firms' knowledge spills over within industries through their R&D activities, but not through their production activities. In addition, we find no evidence of spillovers from domestic firms or firms from Hong Kong, Macao, or Taiwan, suggesting that the size of knowledge spillovers is larger when the technology gap between source and recipient firms is larger.

Original languageEnglish
Pages (from-to)569-585
Number of pages17
JournalReview of Development Economics
Issue number3
Publication statusPublished - 2011 Aug 1


ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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