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Trade orientation and mutual productivity spillovers between foreign and local firms in China

Wei, Yingqi and Liu, Xiaming and Wang, Chengang (2006) Trade orientation and mutual productivity spillovers between foreign and local firms in China. Journal of Asia Business Studies, 1 (1). pp. 46-53. ISSN 1558-7894

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Abstract

This paper argues that multinational firms can benefit from indigenous knowledge diffusion in a host developing country so that there can be two-way productivity spillovers between foreign and local firms even in the developing world. This new argument is confirmed by a very large firm-level data set from the Chinese manufacturing sector. After grouping firms based on their trade orientation, we find that foreign firms have a positive impact on local-market-oriented Chinese firms. When the degree of foreign presence is sufficiently high, there will be negative productivity effects on export-oriented Chinese firms. On the other hand, local Chinese firms have a positive impact on export-oriented foreign invested firms. After dividing foreign firms according to their sources, we find that the beneficial spillovers between OECD and local Chinese firms are much greater than those between Hong Kong/Macao/Taiwan and local Chinese firms.

Item Type: Article
Journal or Publication Title: Journal of Asia Business Studies
Uncontrolled Keywords: Export-oriented ; Foreign direct investment ; Indigenous knowledge ; Local-market-oriented ; Mutual productivity spillovers
Subjects:
Departments: Lancaster University Management School > Economics
ID Code: 44515
Deposited By: ep_importer_pure
Deposited On: 11 Jul 2011 19:17
Refereed?: Yes
Published?: Published
Last Modified: 24 Jan 2014 05:20
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/44515

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