Sectoral Location of FDI in China

The World Economy, Forthcoming

16 Pages Posted: 30 Nov 2010

See all articles by Mi Lin

Mi Lin

Lincoln International Business School, University of Lincoln, UK

Yum K. Kwan

City University of Hong Kong (CityU) - Department of Economics & Finance

Date Written: August 20, 2010

Abstract

This paper investigates the determinants of FDI sectoral allocation in 29 China’s manufacturing sectors from 2000 to 2007. We find that FDI sectoral allocation has a strong self-reinforcing effect. MNCs with ownership advantages tend to invest more in local high productivity sectors. The FDI presence, however, is discouraged in China’s high productivity sectors in which the major market share is dominated by SOEs. We also find that the degree of FDI penetration is higher in sectors that are producing labor-intensive goods and also export-oriented.

Keywords: Foreign Direct Investment, Dynamic Panel Regression

JEL Classification: F21, F23, O53

Suggested Citation

Lin, Mi and Kwan, Yum K., Sectoral Location of FDI in China (August 20, 2010). The World Economy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1716608

Mi Lin (Contact Author)

Lincoln International Business School, University of Lincoln, UK ( email )

Lincoln, LN6 7TS
United Kingdom

HOME PAGE: http://staff.lincoln.ac.uk/mlin

Yum K. Kwan

City University of Hong Kong (CityU) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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