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Export spillover from foreign direct investment in China during pre- and post-WTO accession

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  • Kim, Minjung
  • Xin, Ding

Abstract

This study investigates the effects of export spillover from foreign direct investment (FDI) before and after China’s World Trade Organization (WTO) accession, with particular consideration of the FDI source country and firm ownership structure. It uses a Chinese manufacturing firm-level panel dataset, for the period 1998–2007. In general, there are no spillover effects among state-owned enterprises (SOEs). This study finds negative horizontal and positive vertical spillovers associated with FDI from Hong Kong, Macao, and Taiwan (HMT) among non-SOEs. Furthermore, non-HMT FDI, which is predominantly from the Organisation for Economic Co-operation and Development (OECD) countries, have statistically significant positive horizontal and vertical spillover effects on the export performance of private Chinese firms. Positive forward spillovers occurred only after China joined the WTO, while positive backward spillovers existed during both the pre- and post-WTO periods. China’s entry into the WTO intensified the forward linkage of production, implying that greater availability of high-quality inputs produced by non-HMT foreign multinationals benefited the export performance of private domestic firms.

Suggested Citation

  • Kim, Minjung & Xin, Ding, 2021. "Export spillover from foreign direct investment in China during pre- and post-WTO accession," Journal of Asian Economics, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:asieco:v:75:y:2021:i:c:s104900782100066x
    DOI: 10.1016/j.asieco.2021.101337
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    2. Pham Thi Bich Ngoc & Pham Dinh Long & Huynh Quoc Vu, 2022. "The impact of absorbing productivity spillover on export ability: evidence from an emerging market," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2152938-215, December.
    3. Weixin Yang & Hao Gao & Yunpeng Yang, 2022. "Analysis of Influencing Factors of Embodied Carbon in China’s Export Trade in the Background of “Carbon Peak” and “Carbon Neutrality”," Sustainability, MDPI, vol. 14(6), pages 1-20, March.
    4. Bingqiang Li & Xi Li & Jinzhi Li & Hongchun Lin & Baojuan Rui, 2023. "Empirical Analysis of Export Tax Rebate on Inwards Foreign Direct Investment in China," SAGE Open, , vol. 13(4), pages 21582440231, December.
    5. Radovan Kastratović, 2023. "Exporting decision of agricultural firms: The role of foreign direct investment," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 960-984, October.
    6. Zhao, Hong & Li, Yiying & Wang, Zengtao & Zhao, Runnan, 2024. "Trade liberalization, regional trade openness degree, and foreign direct investment:Evidence from China," Emerging Markets Review, Elsevier, vol. 59(C).

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    More about this item

    Keywords

    FDI; Horizontal spillovers; Vertical spillovers; Firm ownership structure; WTO accession;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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