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 language | English |
|---|---|
| Pages (from-to) | 25-44 |
| Number of pages | 20 |
| Journal | China Economic Review |
| Volume | 15 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Mar 2004 |
Funding
sWe thank an anonymous referee and the participants of the Greater China and the WTO Conference at the City University of Hong Kong, June 16–18, 2002, for their comments and suggestions.
Keywords
- FDI
- Patent
- Spatial effect
- Spillover
