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Is foreign direct investment to China crowding out the foreign direct investment to other countries?

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  • Resmini, Laura
  • Siedschlag, Iulia

Abstract

We estimate a theory-based modified gravity model to analyze the effects of foreign direct investment (FDI) to China on FDI to other countries over the period 1990–2004. Our results suggest that on average, ceteris paribus, FDI flows to China have been complementary to FDI flows to other countries. However, these complementarities exhibit a decreasing trend over time and vary between and within country groups. Furthermore, our results suggest that while the FDI to China has encouraged both horizontal and vertical FDI to other countries, these FDI complementarities have been strongest in the case of vertical FDI.

Suggested Citation

  • Resmini, Laura & Siedschlag, Iulia, 2013. "Is foreign direct investment to China crowding out the foreign direct investment to other countries?," China Economic Review, Elsevier, vol. 25(C), pages 1-16.
    • Handle: RePEc:eee:chieco:v:25:y:2013:i:c:p:1-16
    DOI: 10.1016/j.chieco.2012.12.003
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    Cited by:

    1. Julian Donaubauer & Christian Dreger, 2018. "The End of Cheap Labor: Are Foreign Investors Leaving China?," Asian Economic Papers, MIT Press, vol. 17(2), pages 94-107, Summer.
    2. Barrett, Alan & Bergin, Adele & FitzGerald, John & Lambert, Derek & McCoy, Daire & Morgenroth,Edgar & Siedschlag, Iulia & Studnicka, Zuzanna, 2015. "Scoping the Possible Economic Implications of Brexit on Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS48.
    3. Mustafa Çakir & Alain Kabundi, 2017. "Transmission of China's Shocks to the BRIS Countries," South African Journal of Economics, Economic Society of South Africa, vol. 85(3), pages 430-454, September.
    4. Dr. Nihal Bayraktar, 2015. "Importance of Investment Climates for Inflows of Foreign Direct Investment in Developing Countries," Business and Economic Research, Macrothink Institute, vol. 5(1), pages 24-50, June.
    5. Paul De Grauwe & Zhaoyong Zhang & Chan-Hyun Sohn, 2016. "The Effect of China's Rise on FDI Competition in East Asia: Crowding-out or Crowding-in?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(1), pages 110-134, February.

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    More about this item

    Keywords

    Foreign direct investment; China; Multinational firms' location choice;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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