Abstract
This paper finds evidence for the coexistence within Chinese manufacturing industry of both curvilinear and linear relationships between inward foreign direct investment (FDI) and the productivity of locally owned enterprises (LOEs). This complexity of spillover effects challenges the laissez-faire view that all inward FDI into all types of domestic industry is equally valuable in terms of productivity spillover benefits. Our findings suggest that inward FDI into China leads either to spillovers that decline beyond a critical point, or to effects that continue linearly, depending on the ownership of foreign investors and the technological characteristics of the industry concerned. Our analysis yields original insights into the complex pattern of spillover effects from FDI into China, and deeper understanding of its possible causes.
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© 2010 Peter J. Buckley, Jeremy Clegg and Chengqi Wang
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Buckley, P.J., Clegg, J., Wang, C. (2010). Is the Relationship between Inward FDI and Spillover Effects Linear? An Empirical Examination of the Case of China. In: Foreign Direct Investment, China and the World Economy. Palgrave Macmillan, London. https://doi.org/10.1057/9780230248328_9
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DOI: https://doi.org/10.1057/9780230248328_9
Publisher Name: Palgrave Macmillan, London
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