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Frontiers of Economics in China

Front. Econ. China    2013, Vol. 8 Issue (4) : 535-551     DOI: 10.3868/s060-002-013-0027-9
Orginal Article |
Industry Mix and Curvilinear Spillovers from FDI in China
William M. Tracy()
Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, NY 12309, USA
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This paper uses industry and province specific Chinese industrial data to demonstrate a potential causal link between two strands of the FDI literature. The first strand suggests that the impact of spillovers from inward FDI is less robust in middle-income economies than in either high-income or low-income economies. The second strand suggests diminishing returns of inward FDI on horizontal labor productivity in low-technology industries but not in high-technology industries. This paper suggests a link between these two phenomena. Specifically, if both FDI intensity and industry mix vary with the level of economic development, then an industry-dependent relationship between inward FDI and horizontal spillovers could cause middle-income economies to derive fewer benefits from inward FDI than either high- or low-income economies. This paper also verifies the curvilinear relationship between FDI in low-technology industries and horizontal labor productivity without relying on problematic FDI from Hong Kong, Taiwan and Macao.

Keywords foreign direct investment      curvilinear      China      spillovers     
Issue Date: 10 August 2016
 Cite this article:   
William M. Tracy. Industry Mix and Curvilinear Spillovers from FDI in China[J]. Front. Econ. China, 2013, 8(4): 535-551.
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