Abstract
This paper contributes to the literature on foreign direct investment (FDI) technology spillover effects, focusing on horizontal spillovers from foreign firms to their domestic competitors. Drawing on a unique dataset of 1018 estimates from 41 studies on FDI horizontal spillovers in China, our main objective is to quantitatively summarize reported estimates corrected for publication bias, and account for the heterogeneity in existing empirical results using meta-regression analysis. Robust to different specifications, we find that (1) the average horizontal spillover effect in China is positive and economically significant; (2) the horizontal spillover effects vary across subgroups of firms characterized by the nature of foreign-invested firms, origin of foreign-invested firms and ownership structure of domestic firms. The meta-regression analysis also uncovers the serious consequences of publication bias and reveals that the heterogeneity in research methods adopted by the profession to a large extent explains the diversity of the reported spillover estimates.
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Notes
Navaretti and Venables (2004) provide an overview of the benefits FDI can bring to a host country.
See Stanley and Doucouliagos (2012) for a comprehensive exposition of the MRA methodology and survey of the literature.
Foreign presence refers to the share of foreign firms’ output or employment or asset out of the total in a particular sector.
The keyword search yields more than 1300 hits. There is a concern of quality as most of them are unpublished student working papers and theses. We therefore confine our attention to the most cited published papers during the period 2004-2016. There are no empirical studies dated before 2004.
Wholly foreign-owned subsidiaries and joint ventures are distinguished by the degree of foreign ownership (the nature of foreign-invested firms). Joint ventures are partially foreign-owned FDI firms. Wholly foreign-owned subsidiaries are also called “green field” investments in the literature.
Non-state-owned enterprises include collectively-owned and private enterprises.
2 studies are excluded because of outliers.
Source: China Statistical Yearbook of 2016.
We do not discuss this kind of firm attribute because of inadequate subsample size.
East China refers to Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan; Middle China refers to Shanxi, Anhui, Jiangxi, Henan, Hubei, Hunan, Liaoning, Jilin and Heilongjiang; West China refers to Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia and Xingjiang.
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Acknowledgements
We would like to thank Lok Sang Ho, Jules Hugot and conference participants of Recent Advances in International Trade and Finance (Hong Kong, December 2017) for comments and suggestions which have significantly improved the paper. All remaining errors are our own.
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He, S., Kwan, Y.K. & Fan, H. In search of FDI horizontal spillovers in China: evidence from meta-analysis. Qual Quant 53, 1505–1527 (2019). https://doi.org/10.1007/s11135-018-0825-3
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DOI: https://doi.org/10.1007/s11135-018-0825-3
Keywords
- Foreign direct investment
- Horizontal spillover effect
- Meta-regression analysis
- Method and structural heterogeneity