| By: |
Du, Luosha;
Harrison, Ann;
Jefferson, Gary |
| Abstract: |
The authors investigate how institutions affect productivity spillovers from
foreign direct investment (FDI) to China's domestic industrial enterprises
during 1998-2007. They examine three institutional features that comprise
aspects of China's"special characteristics": (1) the different sources of FDI,
where FDI is nearly evenly divided between mostly Organization for Economic
Co-operation and Development (OECD) countries and Hong Kong (SAR of China),
Taiwan (China), and Macau (SAR of China); (2) China's heterogeneous ownership
structure, involving state- (SOEs) and non-state owned (non-SOEs) enterprises,
firms with foreign equity participation, and non-SOE, domestic firms; and (3)
industrial promotion via tariffs or through tax holidays to foreign direct
investment. The authors also explore how productivity spillovers from FDI
changed with China's entry into the WTO in late 2001. They find robust
positive and significant spillovers to domestic firms via backward linkages
(the contacts between foreign buyers and local suppliers). The results suggest
varied success with industrial promotion policies. Final goods tariffs as well
as input tariffs are negatively associated with firm-level productivity.
However, they find that productivity spillovers were higher from foreign firms
that paid less than the statutory corporate tax rate. |
| Keywords: |
Emerging Markets,Debt Markets,Economic Theory&Research,Investment and Investment Climate,Labor Policies |
| Date: |
2011–08–01 |
| URL: |
http://d.repec.org/n?u=RePEc:wbk:wbrwps:5757&r=cna |