How does FDI affect China? Evidence from industries and provinces

Jimmy RAN, Jan Piaw, Thomas VOON, Guangzhong LI

Research output: Journal PublicationsJournal Article (refereed)

37 Citations (Scopus)

Abstract

Using the latest panel data from 19 industries and 30 provinces in China, we found it is not true that more FDI necessarily brings about more output growth across the board. Local industries without foreign participation lose while those with some participation gain from the inflow. Provinces in western and central regions lose while those in the eastern and coastal regions appear to be the major beneficiaries. While the net effect of FDI is still positive, the regional disparity has been growing. It casts doubt on the rationale of haphazard and lavish policies to compete for FDI in China.
Original languageEnglish
Pages (from-to)774-799
Number of pages26
JournalJournal of Comparative Economics
Volume35
Issue number4
DOIs
Publication statusPublished - 1 Dec 2007

Fingerprint

Industry
China
Participation
Regional disparities
Rationale
Coast
Panel data
Output growth

Keywords

  • Economic growth
  • FDI
  • Industries
  • Net impacts
  • Provinces
  • Spillover

Cite this

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How does FDI affect China? Evidence from industries and provinces. / RAN, Jimmy; VOON, Jan Piaw, Thomas; LI, Guangzhong.

In: Journal of Comparative Economics, Vol. 35, No. 4, 01.12.2007, p. 774-799.

Research output: Journal PublicationsJournal Article (refereed)

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N2 - Using the latest panel data from 19 industries and 30 provinces in China, we found it is not true that more FDI necessarily brings about more output growth across the board. Local industries without foreign participation lose while those with some participation gain from the inflow. Provinces in western and central regions lose while those in the eastern and coastal regions appear to be the major beneficiaries. While the net effect of FDI is still positive, the regional disparity has been growing. It casts doubt on the rationale of haphazard and lavish policies to compete for FDI in China.

AB - Using the latest panel data from 19 industries and 30 provinces in China, we found it is not true that more FDI necessarily brings about more output growth across the board. Local industries without foreign participation lose while those with some participation gain from the inflow. Provinces in western and central regions lose while those in the eastern and coastal regions appear to be the major beneficiaries. While the net effect of FDI is still positive, the regional disparity has been growing. It casts doubt on the rationale of haphazard and lavish policies to compete for FDI in China.

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