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Does Chinese Investment Contribute to The US Economy? An Analysis of Selected US States’ Growth, Employment and Exports

Hasanat Shah, Syed and Li, Jun Jiang (2013): Does Chinese Investment Contribute to The US Economy? An Analysis of Selected US States’ Growth, Employment and Exports.

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Abstract

Our paper analyzed the impact and causal relation of outbound Chinese FDI on growth, employment and export performance of 16 selected US states. The study employed Panel data where contemporaneous panel fixed estimation results shows that the impact of Chinese outbound FDI on employment and export are insignificant. However, the impact of FDI on growth is positive and significant in interaction with States export to China. Applying heterogeneous panel causality approach on a refined dynamic panel model indicates that Chinese FDI does not cause GDP, exports and employment while the results of reverse causality shows that US States GDP (market size) cause the inflow of Chinese outbound FDI. Though the impact of meager Chinese out bound FDI in the US is insignificant to marginally positive but in no way the impact is adverse. Keeping in view the experience of Japanese outbound FDI to the US in 1980's, we come up with some policy recommendation for Chinese investors.

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