Spillovers from Taiwan, Hong Kong, and Macau Investment and from Other Foreign Investment in Chinese Industries

In its analysis of the impact of foreign investment on China's productivity, this article develops two empirical models: one using labor productivity and the other using total factor productivity (TFP). Using cross‐provincial data on Chinese industries for 1993, 1994, and 1997 to regress the empirical models, it is concluded that the impact of investment differed depending on its source, with that from these overseas Chinese enterprises contributing to the spillover effect in regions with a high technology gap, whereas that from other foreign enterprises tending to improve productivity and TFP primarily in regions with a low technology gap. (JEL D24, F13, F15, L60)