A Spatial Analysis of Inward FDI and Rural-Urban Wage Inequality: Evidence from China

Wang, Hao; Fidrmuc, Ján; Luo, Qi

doi:10.2139/ssrn.3594009

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2021

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“…The treatment of joint ventures as the typical entry mode of FDI is therefore reasonable and justifi ed. See also Wang et al (2020a) for comparisons between joint ventures and other forms of FDI in China over recent years.…”

Section: Set Upmentioning

confidence: 99%

Productivity Gap and Inward FDI Spillovers: Theory and Evidence from China

Shen

Wang

Lin

2021

China and World Economy

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This paper constructs a two-stage sequential game model to shed light on the spillover effect of inward FDI on the effi ciency of domestic fi rms in host countries. Our model shows that, given an optimal joint-venture policy made by foreign firms, the impact of the spillover effect of inward FDI is contingent upon the productivity gap between the domestic firms and foreign ones. In particular, we demonstrate that the spillover effect of inward FDI varies negatively with the productivity gap between domestic lowproductivity fi rms and foreign fi rms but works in the opposite way for high-productivity firms. This suggests that once the productivity gap widens, the entry of foreign firms will increase the effi ciency of high-productivity fi rms but reduce the effi ciency of lowproductivity firms. In support of our theoretical model, we provide robust empirical results by using the dataset of annual survey of Chinese industrial enterprises.

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Section: Set Upmentioning

confidence: 99%