Productivity Gap and Inward FDI Spillovers: Theory and Evidence from China

Shen, Jim Huangnan; Wang, Hao; Lin, Shih-Yuan

doi:10.1111/cwe.12369

Cited by 8 publications

(4 citation statements)

References 37 publications

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“…Many studies typically operationalize the absorptive capacity notion using some variant of a distance functionthe closer a firm is to its industry's technical frontier, the more likely that firm will exploit FDI spillovers (Girma, 2005;Shen et al, 2021). Blalock and Gertler (2009), however, postulate the larger the technology gap, the greater the potential benefit a firm can realize from mastering an advanced technologyhence, providing an argument for expecting a positive relationship between the technology gap and spillover effects.…”

Section: Absorptive Capacity and Threshold Modelsmentioning

confidence: 99%

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The impacts of foreign direct investment on total factor productivity: an empirical study of agricultural enterprises

Han,

Smith,

2023

CAER

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PurposeThis paper aims to examine the impact of six possible foreign direct investment (FDI) spillover channels on the total factor productivity (TFP) of Chinese agricultural enterprises and investigate the moderating role of absorptive capacity (technological acumen) on TFP spillover effects.Design/methodology/approachBased on data from 118 agricultural and related Chinese industries, the authors employ a multithreshold regression model to empirically analyze the impact of FDI on the TFP of agricultural enterprises and the threshold effect of absorptive capacity. To overcome potential endogeneity problems, the authors select the FDI stock of corresponding USA industries and the industrial access policy index as instrumental variables and re-estimate the model.FindingsThe results suggest foreign-invested agricultural enterprises are more likely to benefit from FDI, while the “aggregate” FDI spillover effect is negative for domestic agricultural enterprises. However, once threshold effects are introduced, the authors find firms “close to” (“far from”) the technological frontier experience statistically significant positive (negative) spillover effects. Similar results are obtained for virtually all FDI spillover channels for firms in both upstream and downstream industries. FDI spillovers, when they occur, can be a two-edged sword – benefiting some firms at the expense of others.Originality/valueThe authors introduce six FDI spillover channels to examine the impact of FDI on the productivity of foreign-invested and domestic agricultural enterprises. Moreover, the authors analyze the threshold effect of firms' absorptive capacity. These findings can help formulate foreign investment introduction policies based on the characteristics of agricultural enterprises with different ownership structures. These results are also beneficial for agricultural enterprises to better exploit FDI spillover effects and improve their productivity.

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Section: Absorptive Capacity and Threshold Modelsmentioning

confidence: 99%

“…Many studies typically operationalize the absorptive capacity notion using some variant of a distance function – the closer a firm is to its industry's technical frontier, the more likely that firm will exploit FDI spillovers (Girma, 2005; Shen et al. , 2021).…”

Section: Data and Empirical Approachmentioning

confidence: 99%

The impacts of foreign direct investment on total factor productivity: an empirical study of agricultural enterprises

Han,

Smith,

2023

CAER

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“…The paths of MNC spillover effects mainly include the demonstration effect [30], competition effect [31], personnel mobility effect [32], and association effect [33]. With regard to the study of the impact of MNCs on the innovation efficiency of host countries, scholars have proposed the following main ideas.…”

Section: Impact Of Mncs On Innovation Efficiency In Host Countriesmentioning

confidence: 99%

Multinational Corporations and Technological Innovation Development of China’s High-Tech Industries: A Heterogeneity-Based Threshold Effect Analysis

Kou

Liu

2023

Sustainability

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Technological innovation of multinational corporations (MNC) is an important engine to drive the world’s scientific and technological progress, which plays an important role in the sustainable development of global innovation. With China’s high-tech industry from 2009 to 2020 as the research sample, this study empirically analyzes the impact of MNCs’ two-stage innovation on the innovation efficiency of China’s high-tech industry through the perspective of base regression, threshold effect, and regional heterogeneity. It was found that MNC research and development (R&D) efficiency and achievement transformation efficiency have a positive impact on the innovation efficiency of high-tech industries in China, with nonlinear features and regional heterogeneity. This study provides an empirical basis for the efficient use of MNC’s innovative resources and the sustainable development of China’s high-tech industry.

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“…For example, nationality of ownership of MNEs (Buckley et al, 2002(Buckley et al, , 2007a, MNEs' strategic focus (Marin and Sasidharan, 2010;Spencer, 2008) and MNEs' characteristics (Hansen et al, 2009) confer contrasting spillover effects from the MNE characteristics perspective. Likewise, regionspecific institutional idiosyncrasies (Yi et al, 2015), heterogeneous ownership of local firms (Li et al, 2001), larger technology gap (Lai et al, 2009;Takii, 2005), productivity gap (Shen et al, 2021), industry characteristics (Buckley et al, 2007b), variation in subnational institutional development in the host market (Xiao and Park, 2018) and local firms' absorptive capacity (Blalock and Gertler, 2009) explain the asymmetric impact of spillover from the host country characteristics perspective. Besides, spillover effects may occur in different directions affecting both the foreign and local firms in a country (Liu et al, 2009).…”

Section: Macro-level Effectsmentioning

confidence: 99%

Inward foreign direct investment in emerging economies: a review and future research avenues

Chowdhury

Sharma

2022

RIBS

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Purpose Given the surge in foreign direct investment (FDI) in emerging economies (EEs) during the past four decades, inward FDI (IFDI) has spawned a rich, scholarly conversation on the topic. This paper aims to review the literature regarding EE IFDI determinants and the impact of IFDI on those economies. It also aims to provide some future research directions. Design/methodology/approach A systematic review with thematic analysis of 372 articles on the topic, published between 1991 and 2021, is undertaken. In addition to using the relevant keywords, the snowballing approach was used to manually track the literature. Findings This review highlights EE IFDI determinants such as institutional quality, corruption and intellectual property rights, regional trade agreements and distances, formal and informal institutions and their interactions, national and subnational diversity and policy expectations. Further, IFDI impacts EEs both at macro- and micro-levels. This review also indicates a substantial increase in research during the period 2000 to 2010 and a decline thereafter; it also indicates Africa and Latin America being under-researched, with a focus on Africa recently increasing. Research limitations/implications Rich research opportunities exist in examining the mechanisms (mediators) and conditions (moderators) that influence relationships between the antecedents of IFDI and their outcomes. Further opportunities exist in examining the role of the context and in undertaking a multilevel analysis. Originality/value This review provides an understanding of what influences multinational enterprises’ FDI to EEs and how it impacts those economies. It also raises potential future research questions. It provides a holistic understanding of the chosen scope and domain.

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Productivity Gap and Inward FDI Spillovers: Theory and Evidence from China

Cited by 8 publications

References 37 publications

The impacts of foreign direct investment on total factor productivity: an empirical study of agricultural enterprises

The impacts of foreign direct investment on total factor productivity: an empirical study of agricultural enterprises

Multinational Corporations and Technological Innovation Development of China’s High-Tech Industries: A Heterogeneity-Based Threshold Effect Analysis

Inward foreign direct investment in emerging economies: a review and future research avenues

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