Sectoral Location of FDI in China

Lin, Mi and Kwan, Yum K. (2010): Sectoral Location of FDI in China. Forthcoming in: The World Economy

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign Direct Investment; Dynamic Panel Regression
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements

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