JOURNAL ARTICLE

Foreign direct investment and regional innovation: Evidence from China

Haiwei JiangYousha LiangShiyuan Pan

Year: 2021 Journal:   World Economy Vol: 45 (6)Pages: 1876-1909   Publisher: Wiley

Abstract

Abstract This paper studies the impact of foreign direct investment (FDI) on regional innovation, which is measured by patent applications and patent citations, based on city‐level data in China from 1995 to 2015. Using an instrumental variable approach, this paper demonstrates that FDI not only promotes the quantity of regional innovation, but also improves the quality of regional innovation in China. The findings are robust to various specifications of the empirical model and measurements. In addition, we highlight the channel of improving local absorptive capacity and market competition through which FDI exerts positive influence on regional innovation, and show that FDI acts as a substitute for local financial development to raise regional innovation.

Keywords:
Foreign direct investment Competition (biology) Absorptive capacity China Instrumental variable Economics Investment (military) International economics Economic geography Quality (philosophy) International trade Business Industrial organization Macroeconomics Econometrics Geography

Metrics

37
Cited By
5.70
FWCI (Field Weighted Citation Impact)
50
Refs
0.95
Citation Normalized Percentile
Is in top 1%
Is in top 10%

Citation History

Topics

International Business and FDI
Social Sciences →  Business, Management and Accounting →  Strategy and Management
Corporate Finance and Governance
Social Sciences →  Business, Management and Accounting →  Accounting
Innovation Policy and R&D
Social Sciences →  Economics, Econometrics and Finance →  Economics and Econometrics

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