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Chinese firms’ contribution to local poverty alleviation: the role of inward FDI

Author

Listed:
  • Xintong Wu

    (Southwest Petroleum University
    Tsinghua University)

  • Longyuan Ma

    (University of Chinese Academy of Sciences)

Abstract

Although inward foreign direct investment (FDI) plays a critical role in enabling emerging economies to address poverty—one of the foremost Sustainable Development Goals (SDGs)—its impact on the poverty alleviation investments of domestic firms remains underexplored. This study is situated within the context of China’s poverty alleviation initiatives and focuses on subnational-level inward FDI and its two effects, that is, social demonstration effect and industrial competition effect. Using a panel dataset of 14,428 listed firm-year observations spanning 2016 to 2022, we find that subnational-level inward FDI has an inverted U-shaped effect on domestic firms’ poverty alleviation investment; the effect becomes stepper as foreign-invested firms have high levels of poverty alleviation investment and financial performance. By revealing a nonlinear effect, this study helps reconcile inconsistencies regarding the role of subnational-level inward FDI in poverty alleviation and has important implications for introducing inward FDI in emerging economies.

Suggested Citation

  • Xintong Wu & Longyuan Ma, 2025. "Chinese firms’ contribution to local poverty alleviation: the role of inward FDI," Asian Business & Management, Palgrave Macmillan, vol. 24(1), pages 97-127, February.
    • Handle: RePEc:pal:abaman:v:24:y:2025:i:1:d:10.1057_s41291-025-00292-x
    DOI: 10.1057/s41291-025-00292-x
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