The impact of outward FDI on the performance of Chinese firms

Using new firm-level data from the Emerging Multinationals' Events and Networks DATAbase (EMENDATA), this paper investigates the effects on Chinese firms of Outward FDI (OFDI) into advanced European countries. Propensity score matching is combined with a difference-in-difference (DiD) estimator to reduce the problem of self-selection of treated firms in foreign markets, and to eliminate time-invariant and unobservable differences between those firms and the controls. The results provide robust evidence supporting the view that China's OFDI so far have had a positive impact on domestic activities in enhancing firms' productivity and scales of operation, measured by sales and employment. When we distinguish among investments on the basis of entry mode, accounting for endogeneity in the selection process, acquisitions facilitate early access to intangible assets, but are detrimental to financial performance, while greenfield investments have a stronger impact on the scale and productivity of Chinese multinationals investing in Europe.     

The effect of foreign direct investment on firm growth: the case of Taiwan’s manufacturers

Foreign direct investment (FDI) can be roughly separated into an expansionary type and a defensive type. Expansionary FDI seeks to exploit the firm-specific advantage in the host country whereas defensive FDI seeks cheap labor in the host country to reduce the cost of production. Based on Taiwanese data, we examine the effects of these two types of FDI on survival and growth performance of investing firms. Both types of FDI are shown to be beneficial to the survival of firms. Expansionary FDI has the additional benefit of contributing to the sales growth of investing firms at home while defensive FDI is neutral to sales growth. Both types of FDI are also shown to be uncorrelated with job creation or job displacement at home. Our results suggest that FDI will strengthen rather than weaken the viability and competitiveness of domestic industries. It cannot be blamed for industrial ‘hollowing-out’.     

Financial constraints and foreign direct investment: firm-level evidence

Low productivity is an important barrier to the cross-border expansion of firms. But firms may also need external finance to shoulder the costs of entering foreign markets. We develop a model of multinational firms facing real and financial barriers to foreign direct investment (FDI), and we analyze their impact on the FDI decision. Theoretically, we show that financial constraints can affect highly productive firms more than firms with low productivity because the former are more likely to expand abroad. We provide empirical evidence based on a detailed dataset of German domestic and multinational firms which contains information on parent-level financial constraints as well as on the location the foreign affiliates. We find that financial factors constrain firms’ foreign investment decisions, an effect felt in particular by firms most likely to consider investing abroad. The locational information in our dataset allows exploiting cross-country differences in contract enforcement. Consistent with theory, we find that poor contract enforcement in the host country has a negative impact on FDI decisions.     

外商投资的制度效应与外资战略调整

对外开放30年来,我国吸收外商直接投资额持续增加,尤其近15年一直高居发展中国家首位。外商投资发挥了巨大的制度效应,推动经济体制转轨和市场经济发展,带动经济成长,创造大量就业机会,形成了以开放促改革和发展的中国道路。如今,我国对外开放进入全面转型期,外商投资增长伴生的矛盾日益复杂,助长贸易失衡、流动性过剩,内外资企业竞争加剧、摩擦增加。展望未来,调整外资政策,在扩大开放中提高外商投资水平,将成为我国的必然选择。     

The Impact of FDI on Developing Countries

I. IntroductionForeign direct investment (FDI) has been one of the defining features of the world economyover the last two decades. It has grown at an unprecedented pace for more than ten years,with only a slight interruption during the recession of the early 1990s. Almost all economiesnow are competing to attract multinational corporations (MNCs). Inward FDI flows havebeen far exceeding private debt flows until recently in some emerging market economies. Interms of geographic distributio…     

What has happened to small business investment spending?

Conclusions Thoughtful citizens are rightfully concerned about the apparent sluggishness of total investment spending. Perhaps they should also be worried about who is doing the investing; the evidence presented in this paper indicates that in manufacturing there has been an increasing dominance by the largest 1000 firms during the last 15 years. This is due to an increasing share for the larger firms in total sales and to their relatively easier access to credit. While the regression results are significant, much more work needs to be done if we are to have an entirely satisfactory explanation of this phenomenon. If these results are confirmed, they will raise serious issues for public policy. Our nation's leadership in economic affairs and the high standard of living enjoyed by its citizens are largely a result of high productivity and technical change. No doubt our national mythology ascribes too important a role to the individual entrepreneur, but it is important that this avenue to progress be kept open. The largest firms have impressive talent and facilities, but they are not omnicient: Western Union was not interested in the telephone, and Kodak initially passed up instant photography. We will all pay if the economic or financial structure of the economy fails to offer support to those individuals, rare though they may be, who possess profound ideas but only modest finanial resources.     

FDI facilitated by agglomeration economies: evidence from manufacturing and services joint ventures in China

The open door policy of China’s economic reform since the 1980s has attracted heavy foreign direct investment (FDI) flows into China and especially to Guangdong (particularly the Pearl River Delta region, PRD) and induced significant economic growth during the past two decades. While there exist various classical theories of FDI in attempting to identify the determinants of FDI inflow and to explain the behavior of FDI flows, limited attention has been given from the perspective of agglomeration effects generated by a core-periphery (CP) relation.This paper intends to study the impacts of agglomerations on FDI inflows in the context of Krugman’s CP relation (1991) by investigating (1) the formation of a CP relation via gravity model analysis; (2) whether different types of industry FDI flows will respond differently in the CP-system, given agglomeration effects; and (3) whether FDI origin and firm scale matter in affecting FDI flows.A database consisting of a population frame of 37,742 firm-level manufacturing and services joint ventures investing in Guangdong in 1998 was used. Empirical results show that the agglomerations of the CP relation have affected FDI flow patterns. While both manufacturing and services FDI and sources of investment responded differently to the impacts, smaller firms were found more responsive to the CP-agglomeration settings regardless of FDI by industry type and by source. The significance and implications of the CP-system to further facilitate FDI in the region are discussed.     

经济周期波动与跨国公司投资区域分布

不同国家组群的FDI流入量与世界GDP增长率波动之间的相互关系反映了跨国公司对不同类别国家在不同经济景气阶段的投资态度。文章认为,跨国公司对发达国家具有较强的投资意愿,并且跨国公司对发达国家直接投资的意愿随经济波动状况的变化而变化。跨国公司对发展中国家、欠发达国家甚至高收入的石油国家的投资表现出明显的短期倾向和周期性,这是这些国家市场的有限性、经济对外依赖性和政府对经济的可控性差等因素对跨国公司综合影响的结果。     

Impact of Outward Foreign Direct Investment on Chinese Manufacturing Firms' Financialization and Servitization

This study examines the impact of outward foreign direct investment (OFDI) on Chinese manufacturing firms' financialization and servitization. Using a difference-in-differences approach with propensity score matching, we found that OFDI encouraged firms' financial and service activities. The effects of OFDI on financialization were stronger for firms specializing in short-term financial assets, operating in labor and technology-intensive sectors, investing overseas to pursue production, resources and markets there, and investing in non-OECD and Belt and Road Initiative (BRI) countries. Meanwhile, firms investing overseas were more likely to provide services at the sale or postsale stages. Outward foreign direct investment has also boosted the service activities of firms operating in the technology-intensive sector by investing overseas to seek resources and markets, as well as investing in non-OECD and BRI countries. Finally, OFDI partially influenced the extent of financialization and servitization of firms by affecting their profit-making ability.     

对外直接投资对投资国经济效应的文献综述

随着跨国投资规模的日益扩大,中国作为积极谋求发展的发展中大国及世贸组织成员,资本流向模式正发生着转变,从"吸引外资"到"对外投资",这是中国经济对外开放的战略转折点.从国内外两方面对国际投资的主要理论观点和实证研究进行梳理,对中国对外直接投资具有重要的理论和现实意义.     

金融市场、FDI与全要素生产率增长

本文主要研究金融市场对外商直接投资的影响及其作用渠道。本文运用我国28个省、市、自治区的面板数据进行实证分析,研究结果表明,当前我国金融市场发展不平衡,金融市场影响FDI促进经济增长以及其作用渠道在我国东、中、西部各有不同。在完善的金融市场支撑下,FDI外溢效应得以释放,FDI通过提高TFP推动经济增长;在金融市场发展落后的地区,物质资本的积累依然是经济增长受益于FDI的主要渠道。     

Is Bigger Still Better? The Decline of the Wage Premium at Large Firms

This study shows that the wage premium paid by large firms fell over the past 20 years and that this decline in the size premium is most pronounced among the least educated workers. Empirical evidence supports several explanations for the shrinking size premium. First, there has been a convergence in the returns to worker characteristics at large and small firms over time. Second, small and large firms are hiring more workers with similar characteristics. Particularly important are the declining share of workers at large manufacturing firms and the rising share of workers at large retail firms. Also, the greater decline of unionism at large firms has contributed significantly to the decline in the size premium.     

Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms

This paper examines the relationship between exports, foreign direct investment, and firm productivity. Using longitudinal panel data on Japanese firms, it is found that the most productive firms engage in exports and foreign direct investment, medium productive firms engage in either exports or foreign direct investment, and the least productive firms focus only on the domestic market. Moreover, exports and foreign direct investment appear to improve firm productivity once the productivity convergence effect is controlled for. Firms that retain a presence in foreign markets, either by exports or foreign direct investment, show the highest productivity growth, which contributes to improvements in national productivity. JEL no. F10, F20, D21     

Business Cycles and FDI: Evidence from German Sectoral Data

Globalization has affected business cycle developments in OECD countries and has increased activities of firms across national borders. This paper analyzes whether these two developments are linked. We use a new firm-level data set on the foreign activities of German firms to test whether foreign activities are affected by business cycle developments. We aggregate the data by the sector of the reporting firm, the sector of the foreign affiliate, and the host country. Data are annual and cover the period 1989–2002. We find that German outward FDI increases in response to positive cyclical developments abroad and in response to a real depreciation of the domestic currency. JEL no. E3, F23     

Do small firms compete with large firms?

Despite the pervasive phenomenon of scale economies, the majority of firms have always been small firms. The emergence of small firms as a means of economic development on both sides of the Atlantic has been one of the major new topics of economic policy since the 1980s. This has drawn renewed attention to the question: How are small firms able to exist? The theories of strategic niches and dynamic complementarity imply that small firms seek out markets where they are able to avoid competition with their larger counterparts. This paper tests the validity of these theories by examining the extent to which small-firm profitability is set by large-firm profitability. Considerable evidence shows that the price-cost margins of small firms do not tend to follow those of large firms. This supports the theory that small firms pursue a strategy of producing in distinct product niches.     

South–South FDI: is it really different?

We compare the performance of Northern and Southern multinationals in Sub-Saharan Africa, and contrast it with local firms in the host country. Employing unique firm level data for 19 Sub-Saharan African countries, we show that firms receiving FDI outperform domestic ones, while the origin of the foreign investor is of minor importance. We use three different definitions of “South” to compare Northern and Southern FDI. Overall, we do not find strong differences in terms of firm productivity growth between Northern and Southern FDI, irrespective of how the latter is defined. However, we find that employment growth is generally higher for firms receiving FDI from other African investors as compared to Northern FDI, and they also receive more technology transfer from their parent company abroad.     

Vertical linkages and agglomeration effects in Japanese FDI in Thailand

This paper formally investigates how industrial linkages between Japanese firms in Thailand affect the inter-industry pattern of FDI. It does so in the context of a model of FDI where production is vertically integrated between the home and host economies, using a distinctive industry data set constructed from firm-level information. The econometric evidence indicates that, in addition to the factors that facilitate vertical integration (lower transport costs, lower labour cost, etc.), the opportunity to create industrial linkages or supply networks leads to additional clustering or agglomeration of FDI. J. Japanese Int. Economies 20 (2) (2006) 193–208.     

Industrial groupings and strategic FDI

We show that industrial ownership structures, such as keiretsu groupings in Japan, may significantly impact firms’ incentives to engage in foreign direct investment (FDI). While the previous literature has mainly focused on the cost of capital advantages enjoyed by keiretsu firms, this paper examines two relatively unexplored channels by which ownership structure matters for FDI incentives. The first channel involves the direct incentives generated via standard product and factor market interactions whereby keiretsu firms with cross-ownership consider more directly the congestion effects of further FDI into a market. The second channel involves the indirect incentives generated by sharing of information across keiretsu firms which reduces entry costs of subsequent FDI. We find that keiretsu firms are more aggressive than non-keiretsu firms in their FDI strategies, that is, for any given parameter values they undertake FDI with a higher probability than independent firms. Furthermore, keiretsu firms adopt a more aggressive investment strategy against independent rivals than amongst themselves.     

外资撤离速度与制造业转型升级——基于CGE对IT制造业的仿真分解分析

近年来，IT制造业等外资依赖性较强的产业面临的外资撤离风险不断升高，如何衡量和评估不同撤离速度下内资企业的发展稳定性和实现转型升级的支撑性?文章将CGE模型数值模拟与DEA分解分析相结合，考察不同外资撤离速度场景对IT制造业内资企业的影响，以及机制和路径。结果表明：1、当外资流入为0或者其存量以5%的速度小幅持续撤离时，内资企业受影响较小。较高的资本深化率、技术效率和技术进步使得其能够较快填补市场空白，具备企稳回升的能力；2、当外资存量以25%的较高速度撤离时，内资企业由于技术进步受到抑制，劳动生产率处于不可扭转的持续下滑趋势；3、外资企业在可见预期内仍然将是内资企业的主要技术进步来源，外资撤离会通过抑制内资企业技术进步，从而约束资本深化和技术效率的路径中对内资企业的稳定发展和转型升级产生负面影响。基于上述研究，文章提出相关政策启示和建议。     

中国区域经济收敛与地区差距的再检验

本文首先收集1985—2006年中国28个省市数据验证中国区域经济增长的条件β收敛和绝对β收敛,然后运用Blinder—Oaxaca分解方法来分析造成我国东部地区与中西部地区发展差距的原因。实证结果显示,我国自1985年来区域经济增长没有表现出收敛性。当我们将全国划分为东部地区和中西部地区后,我们发现东部地区经济增长收敛,而中西部地区经济增长不收敛。Blinder—Oaxaca分解结果显示,中西部地区与东部地区经济发展差距扩大的最主要原因是中西部地区实物资本投资不足。随着改革开放的深入,外商直接投资和开放程度在地区差距中发挥的作用越来越大,而教育和地理位置的优惠政策的作用则越来越小。