The Impact Of FDI On The Productivity Of Chinese Food Industry

In recent years, China has already been a "hot spot" for foreign direct investment (FDI). Foreign capital has an impact on Chinese economic growth in different areas. Food industry, which firstly used FDI in China, also attracted a large amount of FDI. FDI in the food industry plays an important role. As Krugman said, in the long run, productivity for businesses is similar to all. Therefore, this paper estimated and analyzed Chinese food firms’total factor productivity (TFP) by using the firm-level census data between1998and2007(174,539sample food firms).Then this paper stematically investigated the impact of foreign direct investment,which came from different source, on Chinese food firms’productivity. We tested for "own-plant" effects, intra-industry effects, regional effects and vertical effects.The results show that:(1) Chinese food firms’productivity between1998and2007showed an overall upward trend, but there is a slight fluctuation in some years due to macroeconomic factors. And Chinese food firms’productivity distribution has significant regional characteristics.(2) Food firms’ foreign ownership has insignificantly positive on the productivity of invested firms except for the significantly positive impact in the beverages and alcohol industry. Although significant positive horizontal spillovers are not found across the country, FDI participation within the city of the same industry influences the productivity of domestic firms. The direction of the regional effects varies in different sub food sectors and across investment with different origins. Both positive backward and forward spillovers generated by FDI originating outside Hong Kong, Macaw and Taiwan (HMT) are observed, while HMT investment has negative vertical spillovers. Finally, according to our study result, we propose some policy implications and study prospects.