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Economic Growth, Local Industrial Development and Inter-Regional Spillovers from Foreign Direct Investment: Evidence from China

id: 2154 Date: 20131014 status: published Times:
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AuthorPuman Ouyang, Shihe Fu
ContentIn many countries inward foreign direct investment (FDI) typically concentrates in a few regions. However, there is little empirical evidence on whether spatially concentrated FDI boosts economic growth in other regions within the same country. We use a dataset that covers 96% of Chinese cities from 1996–2004 and find that “inter-regional spillovers” from FDI concentrated in China’s coastal cities have a positive and significant effect on the growth of inland cities. In addition, an inland city’s industrial development affects its absorptive capacity to gain such interregional spillovers from coastal FDI.
JEL-CodesF21, R12, O40, O14, O18
KeywordsD124Foreign direct investment, Regional inequality, Inter-regional spillovers, Absorptive capacity, Growth
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