Does Foreign Direct Investment Affect the Growth of Local Firms？ The Case of China＇s Electrical and Electronics Industry

Does foreign direct investment(FDI) into developing countries affect the growth of local firms in host countries? Using a dataset of 38 sectors in China’s electrical and electronics industry,in this paper,we analyze whether FDI has a positive effect on local firms,with technology spillovers,added value and increasing total factor productivity,or a negative, market stealing,effect.Estimating the relationship between growth of local firms and investment of foreign firms,our results show that FDI is likely to have a negative impact on the growth of local firms in sectors with large disparities in technology and less experience in business.Therefore,local firms lacking in technology need to find markets with no competition from foreign firms or determine strategies to compensate technology disparities.     

Economic Liberalization and the Computer Industry: Comparing Outcomes in Brazil and Mexico

Market liberalization has been carried out by many developing countries in the hopes of stimulating trade, investment and technology transfer. In order to analyze the impacts of liberalization on a specific industry sector, this paper compares the experiences of Brazil and Mexico in liberalizing the computer industry in the 1990s. The authors conclude that liberalization leads to lower prices and more rapid diffusion of computer use throughout the economy, but at a cost to domestic computer firms who were harmed by foreign competition. Both countries saw an increase in computer production, but Mexico's production was mainly for export to the United States, while Brazil was producing for the domestic market. The differences between outcomes in the two countries have been determined more by environmental factors than by the nature and pace of liberalization.     

Why did China Benefit from a Joint Venture Policy？A Case Study of Shanghai

Mandatory joint venture requirements have played an important role in many developing countries' foreign investment policies. However,such policies have been criticized in some of the economic literatures on the grounds that they deter investment and lead to the development of inefficient industries. A significant amount of foreign direct investment in Shanghai has been in the form of joint ventures. Yet,by many measures,Shanghai has benefited enormously. This article argues that there are three reasons to explain Shanghai's successful use of the joint venture for its industrial development. First,local firms and industries have had the capability and willingness to learn from joint ventures and other foreign invested firms. Second,the joint venture policy has been more likely than not to have "crowded in" local investment rather than crowd it out. Third,investment authorities in Shanghai have had sufficient bureaucratic capacity and political insulation to prevent the joint venture policy from being manipulated by rent seekers.     

Firm Efficiency in Cambodia's Garment Industry on the Eve of the Multi‐Fiber Arrangement Termination

Applying a frontier analysis to 2004 firm‐level data, the present paper investigates firm efficiency and its determinants for Cambodia's garment industry. The study finds that firm experience and remuneration are crucial for improving scale efficiency and overall technical efficiency, while effective use of capital and adequate labor‐skill development are important for enhancing a firm's technical capabilities. Foreign‐owned enterprises with a relatively larger share of foreign labor outperform local firms. However, the present study does not reveal evidence of any advantages of a cluster‐type concentration in Phnom Penh and export markets, nor of any positive impacts of product specialization. The findings imply a need to support skill development for workers and local managers at the middle management level, and to streamline foreign direct investment measures to attract greater numbers of efficient foreign enterprises, so as to promote the development of the garment industry as a whole.     

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.     

The role of foreign direct investment in the host-country firm selection process: firm-level evidence from Slovenian manufacturing

This paper examines the role of inward foreign direct investment (FDI) in firm selection processes in the Slovenian manufacturing sector in the 1994–2003 period. It adopts the firm dynamics framework that allows testing of selection effects directly by assessing the impact of foreign firms’ activity on the probability of exiting of local firms (crowding out). The results show that intra-industry productivity spillover effects offset only a minor part of the competition pressure which results from foreign firm entry, hence incumbent firms experience a drop in their survival probability upon a foreign firm’s entry within a particular industry. This result is driven by foreign firm entry of the greenfield type, as entry through the acquisition of existing firms has no significant effect. The strength of the crowding-out effect decreases with the incumbent firm’s export propensity. There is no significant evidence that inward FDI would stimulate the selection process through backward linkages in the upstream supplying industries, whereas foreign firms’ activity reduces the exit probability of downstream local customers (through forward linkages).     

How Chinese firms learn technology from transnational corporations: A comparison of the telecommunication and automobile industries

China has been utilizing foreign direct investment (FDI) based on the strategy of “trading market access for technology” since 1978. However, there are differences in opinion regarding the performance of China's strategy. This paper examines the growth of technological capability of Chinese indigenous firms under a revised model of technological learning and catch-up based on research by Kim (1997) and Lee and Lim (2001). The paper investigates the process of industrial growth in China by developing the two cases of the telecommunication equipment industry and the automobile industry, and analyzes the aforementioned strategy from the viewpoint of technological learning and industrial catch-up. This study finds that knowledge was gained by leveraging China's huge market to “trade market access for technology”, and that indigenous firms must enhance the intensity of their efforts to assimilate acquired technologies so as to improve their technological capabilities. Through comparison of the two industries, we find that industrial policy regulating private firms’ market access directly affects the performance of the industrial catch-up.     

Politics of the development of small and medium‐sized firms in Japan

Since the 1980s, small and medium sized firms in Japan have adjusted themselves remarkably to the market changes of the post‐Fordism industry, and have significantly contributed to the country's economy. This paper emphasizes the interaction of the state and local producers in building a social environment for nurturing the development of small and medium‐sized firms in Japan. An important role assumed by the state is the creation of local firm‐supporting institutions which have been the foundation of constructing regional industrial system. These local institutions were effectively utilized by the local producers of small and medium sized firms. In this process, central political power and local economic power fused in organizing ‘production’ in a new way of horizontal collaboration.     

数字经济对佛山市产业结构转型升级的影响

基于数字经济视角,提出数字经济能够通过赋能产业集聚、刺激消费需求以及产生新投资需求推进佛山市产业结构升级的假设。采用熵权法以及回归模型对佛山市数字经济发展水平进行测算,对数字经济与产业结构升级关系进行实证分析。结果表明：佛山市数字经济发展水平尽管较广州低,但其差距在不断缩小;数字经济对产业结构转型升级有明显的促进作用;政府调节水平、城镇化水平越高越能够推进产业结构转型升级,但是市场化程度以及外商投资的作用效果并不显著;数字经济能够通过赋能产业集聚、刺激消费需求和创造新的投资需求推动佛山市产业结构转型升级。     

Expansion of EU's Free Trade Agreements into Asian Countries and Its Impact on the Chinese Economy

Abstract

This study investigates the macroeconomic impact of EU's free trade agreements with Asian countries and the US on the Chinese economy. In addition we examine the impacts on the Chinese industry output based on the framework of production network and production fragmentation. The expansion of the EU's economic reach toward ASEAN and Japan through free trade agreement will generate a positive macroeconomic effect on negotiation participants while it generates a negative effect on the Chinese economy: Some portions of existing trade and foreign direct investment will be shifted to partner countries from non-partner countries. However, according to a sectorial analysis, EU's free trade agreements with three countries result in a positive impact on China's electronics and machinery industry, because China's industry is linked to the production fragmentation and foreign affiliates play a crucial role.     

Dawn of Industrialisation? The Indonesian Automotive Industry

This article traces the development of industrial policy towards the Indonesian motor industry within the automotive global value chain. Showing the current dominance of Japanese motor assemblers in Indonesia, it notes the rather undeveloped nature of the locally owned supporting industry, particularly compared with that of neighbouring Thailand. Most investment in auto-parts production has been by foreigners. Nevertheless, Indonesia's rapid domestic-market growth has allowed it to attract foreign automotive investment without having to offer excessively generous incentives. While the continued entry of foreign suppliers of auto parts into Indonesia offers opportunities for local suppliers to upgrade their productive capabilities, it also limits their chances of becoming first-tier suppliers themselves. Japanese automotive investors are optimistic about Indonesia's export potential, more so than Malaysia's.     

外资进入和我国企业的生产率：“溢出”抑或“挤出”效应

我国改革和开放是同时推进的，引进了众多外资企业来推动我国经济发展。那么，外资企业的进入是否有助于我国内资企业的成长？本文分析我国工业企业超大样本数据，探讨外资进入的影响，研究我国内资企业的生产率能否向效率前沿收敛。结果发现，我国不同类型的内资企业均存在效率前沿的收敛趋势，内外资企业生产率差距不断缩小。外资进入对我国内资企业的短期影响主要表现为溢出效应，但是对于同行业的其他外资企业呈现挤出效应，特别是其他独资外企。我们进一步发现外资进入的长期影响是挤出效应，但是对于国有企业和民营企业的影响却不尽相同。     

A case study of the industrial organization theory of direct foreign investment

Conclusion This paper examines the industrial organization theory of DFI by means of a case study of the electronic calculator industry. The investigation is done by examining the relevant product, firm and industry characteristics. We began by focusing on and identifying the technological advances in electronic calculators and the firms responsible for those advances, to determine whether DFI coincided with technological superiority. The evidence presented shows that U.S. foreign investment in electronic calculators became significant during the third phase, when the U.S. firms gained technological leadership in electronic calculator production. The firms which enjoyed this technological leadership are the ones that initiated DFI. Foreign investment activities in electronic calculators were facilitated by a gradual trend toward a concentration of the industry structure in favor of the investors. In some cases, investors were large international firms to begin with. Thus, we can conclude that the industrial organization theory of DFI is supported by the experience of the electronic calculator industry. The fact that the investors themselves generally de-emphasized the cost consideration and emphasized the market potential as motivating factors in initiating DFI ventures provides further credence to this finding. Since the investors had something unique to offer and enjoyed sufficient market power to assume the risk of initiating foreign production to exploit this unique advantage in a potentially large market, they were least concerned about the cost of production. However, the cost factor played an important role behind the DFI in developing countries.     

FDI对我国电子工业生产率的行业内溢出效应研究——以1996—2001年43个细分行业为例

本文考察了外资对中国电子工业劳动生产率的影响。利用1996—2001年期间电子行业的9大部门和43个细分行业的面板数据,并按照无形资产比率、出口比率和国有资本比率对43个细分行业进行了分组检验,我们发现,1996—2001年期间中国电子工业的劳动生产率呈现明显的外商直接投资的溢出效应,并且在不同的行业呈现较大的波动。在无形资产比率高、出口比率高、国有资本比率高的行业,外资对劳动生产率的促进作用显著,而在国有资本比率低、技术含量低的行业,外资对劳动生产率的促进作用不显著。国有企业在促进劳动生产率提高方面具有积极作用,说明国营企业引进外资是一种长期有效的学习跨国公司经验的途径。而且,跨国公司通常被高生产率的电子行业所吸引,在这些行业溢出效应明显存在,但对于一些外资比率低的电子行业,这种正溢出效应不显著。

Abstract：

This paper examines the effect of foreign direct investment（FDI）on the labor productivity of China’s electronics industry. Using panel data of 9 major sectors and 43 sub-sectorsof the electronics industry during the period 1996—2001,and doing group test according to the ratio of intangible assets,the export ratio and the state-owned capital ratio of the 43 sub-sectors,we find that during 1996—2001,labor productivity of the Chinese electronics industry showed significant spillover effects of FDI and large fluctuations in different industries. In industries that have high intangible assets ratio,high export ratio and high state-owned capital ratio,FDI played a more significant role in promoting labor productivity than in industries that have low state—owned capital ratio and low technology contents. State-owned enterprises has a positive effect in promoting labor productivity,indicating that introducing foreign investment is an effective long term route to learn transnational corporations’ experience for state-owned enterprises. Moreover,transnational corporations are always attracted to higher productivity sub-sectors,implying significant spillover effects in these industries,while in sub-sectors with low rate of foreign invest-ment,the spillover effect is not significant.     

“进口替代型”引资战略背景的本土品牌出路:剖析汽车制造业与制药业

东道国的引资战略可分为"出口导向型"和"进口替代型"。对我国两个"进口替代型"引资战略代表产业汽车制造与制药产业的研究发现,"进口替代型"引资战略促进了本土品牌的崛起。进一步运用迈克尔.波特的钻石模型分析我国"进口替代型"引资战略中本土品牌得以生存发展的基础条件后认为,我国本土品牌的发展应从提高安全高效地利用两个市场、两种资源的能力;整合"大产业链",构筑新的竞争优势;增强企业与外资品牌进行竞争的能力等方面着手。     

Global outsourcing or foreign direct investment: Why apple chose outsourcing for the iPod

A simple model is presented, where a firm's productivity is endogenized by its R&D investment. It shows that the most productive firms may prefer international outsourcing to foreign direct investment (FDI) in industries with a high innovation share. The high innovation share motivates the firms to economize on organizational cost in order to save resources for R&D investment, making outsourcing preferable to FDI because the former incurs a smaller organizational cost. This model helps explain why Apple Inc., belonging to the electronics industry, which has a particularly high innovation share, launched its innovative iPod through international outsourcing instead of FDI.     

外资进入和我国企业的生产率：“溢出”抑或“挤出”效应

我国改革和开放是同时推进的,引进了众多外资企业来推动我国经济发展。那么,外资企业的进入是否有助于我国内资企业的成长？我们分析我国工业企业超大样本数据,探讨外资进入的影响,研究我国内资企业的生产率能否向效率前沿收敛。我们发现,我国不同类型的内资企业均存在效率前沿的收敛趋势,内外资企业生产率差距不断缩小。外资进入对我国内资企业的短期影响主要表现为溢出效应,但是对于同行业的其他外资企业呈现挤出效应,特别是其他独资外企。我们进一步发现外资进入的长期影响是挤出效应,但是对于国有企业和民营企业的影响却不尽相同。     

Local Clusters in Global Chains: The Causes and Consequences of Export Dynamism in Torreon's Blue Jeans Industry

Using a case study of the export-oriented blue jeans industry in Torreon, Mexico, the authors discuss the role of US buyers in promoting full-package apparel production. While the networks associated with this model yield better development outcomes for firms and workers than those typical of the maquila industry, the Torreon cluster is not adequately described as a “high road” industrial district. The global commodity chains framework is used to assess the developmental implications of the apparel industry's growth in Torreon. By emphasizing the relationship between producers and foreign buyers, this approach provides a useful way to bridge the global–local divide in the literature on industrial clusters in developing countries.     

Foreign direct investment in China: Policy,recent trend and impact 1

One of the most important elements of China's economic reform has been the promotion of foreign direct investment (FDI) inflow. Government polices on FDI have gone through different stages in their main objectives since the late‐1970s, from gradually opening to foreign investors, to actively encouraging inward investment, directing FDI in accordance with domestic industrial restructuring, and complying with China's World Trade Organization (WTO) obligations. FDI in China has experienced rapid growth especially since the mid‐1990s, as well as structural change. Most of the earlier investments were small scale, labor‐intensive and export‐oriented. In recent years, more investment has been large scale and more capital and technology intensive, aiming at both domestic and export markets. Moreover, increasingly more investment has come from the industrial world, and has located along the eastern coastal regions, in additional to the two southeastern provinces. FDI has played a crucial role in China's rapid growth, economic transition, and, mostly importantly, integration with the world. China's recent accession to the WTO provides more incentives to foreign investors. At the same time, it will also result in more intense competition for domestic firms.     

Spatial Spillovers from Foreign Direct Investment: Evidence from the Yangtze River Delta in China

This paper examines the spatial externality from foreign direct investment on domestic firms. Using Chinese firm‐level data for 2004, and after accounting for an endogeneity problem, we find that foreign firms generate a significantly positive spillover effect on the regional productivity of domestic firms in similar counties and industries. Estimating a spatial‐autoregressive model, we further show that such local spillovers could transmit to domestic firms in other counties and industries through interactions among domestic firms. However, these spatial multiplier effects decline with distance, thereby reducing the foreign direct investment spillover effects for domestic firms in distant locations.