The determinants of location choice of South Korean FDI in China

By using extensive and unique firm-level data for South Korean foreign affiliates in China, we investigated the determinants of location choice for South Korean multinational companies. South Korean companies are unevenly distributed inside China with more than 60 percent of their affiliates being located in the three northeast regions. Using conditional logit estimation, we found that market size and government policies approximated by economic zones, quality of labor, and transport infrastructure play a positive role in deciding location. On the other hand, labor costs, inner waterways, and distance show negative and significant coefficients. Finally, the model specification is shown to be robust to possible violation of the assumption of identical independent error terms. Some of the estimation results stand in contrast to those of other studies on the determinants of FDI stock flows from the world or Japan.     

论中国对外直接投资产业战略选择

本文通过对中国对外直接投资产业选择的现状分析,结合我国社会经济发展的需要及我国产业国际竞争力的现实条件,提出今后我国企业在对外直接投资中的产业战略。     

A political economy theory of foreign investment: An alternative approach

The present paper uses the political economy model developed by Grossman and Helpman and studies the equilibrium of a game between the two countries; the home country, which exercises the trade policy for maximizing its objective function, and the foreign country, which controls the level of its capital export for the similar purpose. It is shown that if the production costs of the two countries are identical, the equilibrium of the game in which the two countries make simultaneous move will very likely achieve free trade.     

The foreign exchange exposure of Chinese banks

Using the capital market approach and the equity price data of 14 listed Chinese banks, this empirical study finds that there is a positive relationship between bank size and foreign exchange exposure. This relationship may reflect the larger foreign exchange operations and trading positions of larger Chinese banks and their significant indirect foreign exchange exposure arising from impacts of the renminbi exchange rate movements on their customers. Empirical evidence also suggests that the average foreign exchange exposures of state-owned and joint-stock commercial banks in China are higher than those of banks in Hong Kong, notwithstanding their limited participation in international banking businesses compared with their Hong Kong counterparts. It is also found that negative foreign exchange exposure is prevalent for larger Chinese banks, suggesting that an appreciation of the renminbi tends to reduce their equity value. It is therefore likely that the banking sector's performance will be hampered. Together with the fact that decreases in equity values generally imply a higher default risk, the effects of different scenarios of renminbi appreciation on the default risk of Chinese banks should therefore be closely monitored.     

Do Chinese domestic firms benefit from FDI inflow?: Evidence of horizontal and vertical spillovers

Using a large panel dataset covering all manufacturing firms (above a minimum scale) in China from 1998 to 2005, this paper examines whether there exist productivity spillovers from foreign direct investment (FDI) to domestic firms. In estimating productivity, we control for a possible simultaneity bias by using semi-parametric estimation techniques. We find that Hong Kong, Macao and Taiwan (HMT) invested firms generate negative horizontal spillovers, while Non-HMT foreign invested firms (mostly from OECD countries) tend to bring positive horizontal spillovers in China. These two opposing horizontal effects seem to cancel out at the aggregate level. We also find strong and robust vertical spillover effects on both state-owned firms and non-state firms. However, vertical spillover effects from export-oriented FDI are weaker than those from domestic-market-oriented FDI.     

广东省对外直接投资影响因素的实证分析

本文利用近几年的数据对广东省对外直接投资的影响因素进行了计量分析。结果表明,广东省的对外直接投资正处于投资发展周期从第二阶段向第三阶段过渡的时期,对外直接投资逐渐从偶发性的投资变为经常性、较大规模的投资。而且其对外直接投资与出口贸易的目的地有较高的重合性,且偏好对人均收入较高、自然资源较丰富的国家进行投资。     

The color of money: The effects of foreign direct investment on economic growth in transition economies

During the initial phase of transformation to a market economy many of the Eastern European and Baltic countries experienced an initial decline of output. This paper explains, both theoretically and empirically, why they experienced negative growth initially, and how some of them started to get over and recorded positive growth recently. As a vehicle to transfer technology and managerial skills to the transition economies, as well as to increase capital work, foreign direct investment (FDI) is regarded important. Production function with a low elasticity of substitution between two inputs is employed to capture the dynamic short-run movement of these economies. Cross-sectional and panel data, are utilized to analyze the short-run dynamic movement of equilibrium paths of transformation to a market economy. The findings confirm that total factor productivity and GDP in the region grew together with the inflow of FDI, and the marginal contribution of FDI to growth is greater than that of domestic investment. JEL no. O50, P39, F21 This project is financially supproted by the ARC Small Grant, Department Research Grant, Department of Economics, UWA and Division Research Grant, Commerce, Division, Lincoln University.     

Promoting exports: the role of inward FDI in China

Since the late 1970s, exports and inward foreign direct investment (FDI) in China have risen dramatically under the open-door policy. The critical role of FDI in China's exports may be indicated by the fact that exports by foreign affiliates in China in 1998 were US$81 billion, comprising 44% of China's total exports in that year. While there is considerable evidence on the FDI export linkage in China, systematically empirical analyses have been limited. This paper investigates the issue using panel data at the provincial level in the period of 1986–1997. The findings support the widely held belief that increased levels of FDI positively affect provincial manufacturing export performance.     

对我国对外直接投资区位选择的思考

本文认为我国对外直接投资的区位选择不能过于集中,目前的对策是重点投资东南亚地区,开展对发达国家周边发展中国家和资源丰富国家的投资,鼓励中小企业投资发展中国家,有针对地投资发达国家。     

Capital or knowhow: The role of foreign multinationals in Sino-foreign joint ventures

China's success in attracting foreign direct investment has been cast in doubt as mainly a transfer of capital, not knowhow, because its financial system is incapable of allocating domestic savings and hard-earned foreign reserves to domestic enterprises. To shed light on this debate, we examine the determinants of equity sharing in Sino-foreign joint ventures with the premise that the roles of foreign direct investment (in transferring capital or knowhow) should be reflected in equity sharing between multinational firms and local firms. Our empirical analysis offers strong evidence for foreign direct investment as a transfer of knowhow, but limited support for foreign direct investment as a transfer of capital, which points to the need for further reform in China's financial system.     

地方政府对国外直接投资税率竞争的博弈分析

本文采用伯川德价格竞争模型研究两个地方政府如何制定税率来竞争一个外商投资项目。分析了企业在不同地区投资的价值由公有信息和私有信息组成时,投资环境的异同对于均衡税率的影响。若投资环境同质,两地方政府税率竞争均衡时税率为零;若投资环境对企业有差异,均衡税率大于零。两种情况下的均衡税率都低于社会福利最大化时的税率水平。     

Foreign direct investment, processing trade, and the sophistication of China's exports

China's export structure has shown a rapid shift towards more sophisticated industries. While some believe that this trend is a result of processing trade and foreign direct investment, the evidence is mixed. This paper examines variations in level of export sophistication across China's manufacturing industries. We find that an industry's level of export sophistication is positively related to the share of wholly foreign owned enterprises from OECD countries and the share of processing exports of foreign-invested enterprises, and negatively related to the share of processing exports of indigenous Chinese enterprises. Evidence from the relative export prices of Chinese goods, which measure within-product export sophistication, shows a similar pattern.     

中外农村物流发展对策比较研究

"农民真苦,农村真穷,农业真危险"直指我国"三农"问题的存在,也呼吁着"三农"问题的解决。大力发展农村物流,直接关系到"三农"问题的解决,是关系国计民生的大事。本文通过对国际上农村物流发展成功经验的分析和对我国、发达国家的农村物流进行对比,找出我国农村物流发展的差距,并提出对策,以促进我国农村物流的发展。     

Investigation of the “China effect” on crowding out of Japanese FDI: An industry-level analysis (1990–2004)

This paper applies a dynamic panel model to investigate whether China is crowding out Japanese foreign direct investment (FDI) from other economies of Asia. We examined this with industry-level data on Japanese FDI flows into Asian economies. In order to deal with possible problems of serial correlation and endogeneity, we estimated coefficients using a difference and system generalized method of moments to examine the “China effect” on industries. We found a significantly high degree of crowding out effect by China on its Asian counterparts. Among twelve industries, a crowding out effect was found in nine industries, including electrical &; electronics—the biggest industry for Japanese FDI. However, a complementary effect was found in two industries, one of them being transport, which is the second biggest industry for Japanese FDI. We conclude that while China's rise is a prominent threat for the region, it could be transformed into an opportunity in vertically fragmented industries.     

Taxes and the Financial Structure of German Inward FDI

The paper analyses the financial structure of German inward FDI. Intra-company loans granted by the parent should be all the more strongly preferred over equity the lower the tax rate of the parent and the higher the tax rate of the German affiliate. We find that the corporate tax rate of the foreign parent has no significant impact on the financial structure of a German subsidiary. However, among subsidiaries that are directly held by a foreign investor those firms that on average are profitable react more strongly to changes in the German corporate tax rate than this is the case for less profitable firms. This gives support to the frequent concern that high German taxes are partly responsible for the high levels of intra-company loans. Taxation, however, does not fully explain the high levels of intra-company borrowing. Roughly 60 per cent of the cross-border intra-company loans turn out to be held by firms that are running losses. JEL no. F23, H25     

Estimating the Impact of Time-Invariant Variables on FDI with Fixed Effects

This paper applies the panel fixed effects with vector decomposition estimator to three FDI data sets to estimate the impact of time-invariant variables on FDI while including fixed effects. We find that the omission of fixed effects significantly biases the results, leading to contradictory predictions regarding the effect of trade costs and culture across data sets. After eliminating these biases, the differences across data sets largely disappear and many time-invariant variables consistently indicate the importance of vertical FDI. This suggests that some controversies in the literature may be driven by the extent to which unaccounted fixed effects biases vary across different data sets. JEL no.  F14, F23     

Outward FDI and Local Employment Growth in Italy

Using several data sources, we assess the impact of Italy’s outward foreign direct investment (FDI) on local employment growth between 1996 and 2001 for 12 manufacturing industries and 103 administrative provinces. Our main result is that, controlling for the local industrial structure and area fixed effects, FDI is associated with faster local employment growth, relatively to the national industry average. We also find that employment in small plants is not negatively influenced by higher levels of FDI. Our findings do not support therefore the idea that FDI is detrimental to local employment growth in the home country. JEL no.  C21, F21, F23     

Role of high-speed rail on social fixed assets investments in China

ABSTRACT

Rapid development of high-speed rail (HSR) in the past decade has a tremendous boosting effect on China’s economy and society. Under the ‘New normal’, HSR provides an important physical space for the steady expansion of the national economy. This paper uses a panel dataset comprising 285 prefecture-level cities in 2010–2016 to establish an investment measurement model and estimate the impact of HSR on social fixed assets investment. It also uses the difference-in-difference and propensity score matching tests to verify the results. Two important findings arise from the empirical analyses: (1) HSR development significantly stimulates China’s social fixed assets investment, foreign direct investment and real estate investment; and (2) HSR investment does not substitute for investments in other industries, instead, it supplements them. These findings provide strong theoretical and empirical support for China’s long-term HSR development strategy.