Spillover effects of FDI on innovation in China : evidence from the provincial data

Kui Yin CHEUNG, Ping LIN

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

321 Citations (Scopus)

Abstract

Foreign direct investment (FDI) can benefit innovation activity in the host country via spillover channels such as reverse engineering, skilled labor turnovers, demonstration effects, and supplier-customer relationships. Using provincial data from 1995 to 2000, we find positive effects of FDI on the number of domestic patent applications in China. This finding is robust under both pooled time-series and cross-section data estimation and panel data analysis and for different types of patent applications (invention, utility model, and external design). The spillover effect is the strongest for minor innovation such as external design patent, highlighting a "demonstration effect" of FDI.
Original languageEnglish
Pages (from-to)25-44
Number of pages20
JournalChina Economic Review
Volume15
Issue number1
DOIs
Publication statusPublished - 1 Mar 2004

Fingerprint

Innovation
Spillover effects
Foreign direct investment
Patents
China
Demonstration effect
Supplier-customer relationships
Host country
Panel data analysis
Spillover
Labour turnover
Reverse engineering
Skilled labor
Invention
Innovation activities
Cross section

Keywords

  • FDI
  • Patent
  • Spatial effect
  • Spillover

Cite this

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Spillover effects of FDI on innovation in China : evidence from the provincial data. / CHEUNG, Kui Yin; LIN, Ping.

In: China Economic Review, Vol. 15, No. 1, 01.03.2004, p. 25-44.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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AB - Foreign direct investment (FDI) can benefit innovation activity in the host country via spillover channels such as reverse engineering, skilled labor turnovers, demonstration effects, and supplier-customer relationships. Using provincial data from 1995 to 2000, we find positive effects of FDI on the number of domestic patent applications in China. This finding is robust under both pooled time-series and cross-section data estimation and panel data analysis and for different types of patent applications (invention, utility model, and external design). The spillover effect is the strongest for minor innovation such as external design patent, highlighting a "demonstration effect" of FDI.

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