Working Paper Series
FDI, Market Structure and R&D Investments in China
(), Fredrik Sjöholm
(), Ping He and Jinchang Qian
Abstract: FDI can be an important channel for developing countries’
ability to get access to new technology. The impact of FDI on
domestically-owned firms’ technology development is less examined but it is
frequently argued that technology externalities or demonstration effects
could have a positive impact. Another and so far little examined effect of
FDI on technology development in domestically-owned firms is through the
impact on competition. We examine the effect of FDI on competition in the
Chinese manufacturing sector and the effect of competition on firms’ R&D.
Our analysis is conducted on a large dataset including all Chinese large
and medium sized firms over the period 1998-2004. Our results show that FDI
increases competition but there are no strong indications of competition
affecting investments in R&D.
Keywords: China; FDI; Competition; R&D; (follow links to similar papers)
JEL-Codes: F23; L11; O31; (follow links to similar papers)
30 pages, June 21, 2007
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