FDI Export Spillovers

Most of the spillover studies of foreign direct investment (FDI) focus on itsproductivity impact, labeled technology spillovers. While, much less effort has spent onidentifying other indirect benefits from multinational enterprises (MNEs), such as thoseon the export of domestic firms. As one of the largest recipients of foreign directinvestment and because of the massive exports, china has attracted considerableattention. Examining the effect on domestic firms’ exports by FDI is of policysignificance, it contributes to make polices to take more advantages of FDI.The impact of MNEs on the export behavior of domestic firms, namely FDI exportspillovers, has been a new issue of international trade theory in recent years. Therefore,based on the existing literatures, we conclude the development of FDI export spilloverstheory and empirical studies, find out the mechanisms on firm-level FDI exportspillovers. Multinational enterprises have been the important part of Chinese high-techand traditional industry, these industries possess different characteristics,as absorbingability and capital intensity, so the paper believe high-tech industry and traditionalindustry have the different channels of FDI export spillovers on domestic firms.FDI export spillovers include horizontal spillovers in the same industry, verticalspillovers between industries. The former involves information spillover, demonstrationspillover and competing spillover, the behind involves forward spillover and backwardspillover. Due to the buyer-supplier between domestic and foreign firms inter-industryvertical spillovers are more likely to happen and also because it is more competitive inthe same industry.The paper uses an industry-level data set for2001-2011of high-tech andtraditional industry, and establishes a new model to combine horizontal and verticalspillover together the first time. Our results indicate that there are significant exportspillovers from foreign firms in Chinese high-tech and traditional industry. We findpositive and significant demonstration and backward spillover, passive and significantforward spillover in high-tech industry. At the same time, the results indicate positiveand significant information spillover in traditional industry, passive and significantforward, demonstration spillover in labor-intensive industry and capital-intensiveindustry respectively. In short, there are export spillovers from foreign firms to domestic firms in china,and there are differences between high-tech and traditional industry. The paperdiscussed the reasons and proposed policy suggestions.