FDI spillovers in the Chinese manufacturing sector

Abstract

This paper uses a new longitudinal dataset of more than 15,000 manufacturing firms to analyse the heterogeneous responses of firms to foreign direct investment in China. Domestic firms operating in sectors where foreign firms are also active have higher total factor productivity. However, the magnitude of such horizontal spillovers depends on the structure and origin of foreign ownership, the export status of firms and the characteristics of the special economic zones firms are operating in. © 2010 The Authors. Journal compilation © 2010 The European Bank for Reconstruction and Development.