The Impact Of Foreign Entry Pace On Domestic Firms’ Exports

China has attracted the most FDI among the developing countries, but also the world’s biggestexporter. The impact of FDI inflow on the domestic firms’ export trades has attracted greatattention of scholars. However, in retrospect, the existing literature only focuses on the static FDIexport spillover, while ignoring the important factor of foreign entry pace. That is equal to assumethat all FDI flows into China at the same speed, which clearly contradicts with reality. This paperintroduces the foreign entry pace into the framework of FDI export spillover, aimed to make anoriginal theoretical and empirical study on the effects of the foreign entry pace on the domesticfirms’ exports.The paper firstly reviews the existing literature, introduces the foreign entry pace into thebasic theoretical model of FDI export spillover and then puts forward effecting mechanism andtheoretical hypothesis of foreign entry pace. Based on that, the paper uses more than74,000firm-level panel data of Chinese manufacturing industry from2003to2008to make an empiricalanalysis on the effects of the foreign entry pace on the domestic firms’ exports. We use the Probitand Tobit model to empirically analyze the export decision and intensity of domestic firmsrespectively. We find that (1) the FDI presence level has positive impact on the export trade ofdomestic firms, however, the foreign entry pace will negatively moderate the FDI export spillovereffect mainly through the channel of competition.(2) The negative moderating effects of theforeign entry pace depend on the technology level of the industries and it’s larger in high-techindustries than in low-tech industries. We also use the Bootstrap method to check the difference indifferent technology industries.(3) The ownership of domestic firms have no significant effect onthe moderating effects of the foreign entry pace, however the private firms will suffer morenegative effect of foreign entry pace than other firms. These findings not only have pushed forwardthe theoretical analysis in this field greatly, but also are of important policy implication.