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What Determines Innovation Activity in Chinese State-owned Enterprises? The Role of Foreign Direct Investment

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  • Girma, Sourafel
  • Gong, Yundan
  • Görg, Holger

Abstract

Summary We investigate whether inward foreign direct investment (FDI), either at the firm or industry level, has any impact on product innovation by Chinese state-owned enterprises (SOEs). We use a comprehensive firm-level panel data set of some 20,000 SOEs during 1999-2005. Our results show that foreign capital participation at the firm level is associated with higher innovative activity. Inward FDI in the sector, by contrast, has a negative effect on innovative activity in SOEs on average. However, there is a positive effect of sector-level FDI on SOEs that export, invest in human capital, or undertake R&D.

Suggested Citation

  • Girma, Sourafel & Gong, Yundan & Görg, Holger, 2009. "What Determines Innovation Activity in Chinese State-owned Enterprises? The Role of Foreign Direct Investment," World Development, Elsevier, vol. 37(4), pages 866-873, April.
    • Handle: RePEc:eee:wdevel:v:37:y:2009:i:4:p:866-873
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