FDI Technology Spillovers and Spatial Diffusion in the People’s Republic of China

Publication | November 2013

This paper investigates the geographic extent of foreign direct investment technology spillovers on the productivity of domestic private firms in the People’s Republic of China.

This paper investigates to what extent the impact from foreign direct investment (FDI) to host country domestic firms would condition on geographic distance. Empirical results show that FDI presence (measured as employment share) in a locality will generate negative impact to the productivity performance of domestic private firms in the same location. Domestic private firms enjoy positive FDI spillovers through inter-regional technology diffusion via labor market channel. FDI spillovers measured as sales income share, however, are negative in both intra-regional and interregional dimensions.


  • Abstract
  • Introduction
  • Data and Exploratory Analysis
  • The Empirical Model
  • Estimation Issues and Empirical Results
  • Conclusions and Policy Implications
  • References