Abstract
This paper examines the linkage effects of foreign direct investment (FDI) on firm-level productivity in Chinese manufacturing. It is found that FDI generates positive vertical linkage effects in Chinese manufacturing at both the national and regional levels, and limited positive horizontal spillovers at the regional level. While OECD firms gain from both vertical and (probably) horizontal linkages, Hong Kong, Macao and Taiwanese firms benefit only from backward linkage effects. In the domestic sector, in which we are most interested, both state-owned enterprises (SOEs) and non-SOEs are hurt by competition from foreign firms in the same industries. While SOEs gain from vertical linkages with foreign firms, non-SOEs are unable to do so. The patterns of productivity spillovers from FDI in Chinese manufacturing seem to be determined by one key factor - the technological capabilities of the firms involved. Important data limitations and policy implications of this research are discussed.
| Original language | English |
|---|---|
| Pages (from-to) | 1113-1130 |
| Number of pages | 18 |
| Journal | Journal of International Business Studies |
| Volume | 40 |
| Issue number | 7 |
| DOIs | |
| Publication status | Published - Sept 2009 |
Bibliographical note
Funding Information:We thank the journal editors (especially the Departmental Editor, Professor Witold Henisz) and four anonymous referees for their very helpful comments on earlier versions of the paper. This research was supported by a grant from the ‘‘project 211(Phase III)’’ of the Southwestern University of Finance and Economics.
Keywords
- FDI
- Firm and sector groupings
- Horizontal and vertical linkages
- Technological capabilities
ASJC Scopus subject areas
- Business and International Management
- General Business,Management and Accounting
- Economics and Econometrics
- Strategy and Management
- Management of Technology and Innovation
