Benefit or damage? The productivity effects of FDI in the Chinese food industry |
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| Institution: | 1. China Acadmy for Rural Development, School of Public Affairs, Zhejiang University, China;2. School of Management, Zhejiang University, China;3. Department of Agricultural Economics, Purdue University, USA;1. USDA-Economic Research Service, Washington, DC, USA;2. China Center for Agricultural Policy, School of Advanced Agricultural Sciences, Peking University, Beijing, China;3. School of Agricultural Economics and Rural Development, Renmin University of China, Beijing, China;1. School of Public Administration and Policy, Renmin University of China, China;2. Nanyang Centre for Public Administration, Nanyang Technological University, Singapore;1. Universidad de Cádiz, Agrifood Excellence International Campus (ceiA3), Facultad de Ciencias Económicas y Empresariales, c/Duque de Nájera, 8, 11002 Cadiz, Spain;2. Rural Development Association “Janda Litoral”, Spain;3. Universidad de Cádiz, c/Duque de Nájera, 8, 11002 Cadiz, Spain;1. School of Agricultural Economics and Rural Development, Renmin University of China, China;2. Department of Agricultural and Resource Economics, University of Connecticut, USA;3. School of Public Policy and Management, Tsinghua University, China |
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| Abstract: | We investigate the impact of foreign direct investment (FDI) on the total factor productivity of Chinese food firms using firm-level census data between 1998 and 2007 (174,940 sample food firms). We test for within-firm, within-industry, and vertical effects. We find that the effect of FDI on the productivity of Chinese food firms depends significantly on the type of FDI and its countries of origin. FDI from non-HMT (Hong Kong, Macaw and Taiwan) regions can improve the productivity of the invested firm, and also increases the productivity of domestic food firms through vertical industry linkages. However, domestic food firms may be crowded out by non-HMT investment in the same industry. HMT investment can generate positive within-industry productivity spillovers, but negative vertical spillovers. Our findings have immediate implications for policymakers in China, as well as for governments of less developed countries that are formulating foreign investment policies. |
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| Keywords: | China Food industry Foreign direct investment (FDI) Productivity spillovers |
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