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2010•China Industrial EconomyRequires access

Research on the Spillover Effects of FDI on the Technical Efficiency of China's Industrial Enterprises——The Quantitative Analysis of Chinese Industrial Firms from 2002 to 2006

Cheng Lei

Open publisher page 3 citations

Abstract

This paper examined how FDI affects the technological efficiency of industrial firms in China through Stochastic Frontier Analysis based on the data of Chinese industrial firms from 2002 to 2006.The main conclusions includes: The firm’s technological efficiency will rise by 6.28% owing to FDI coming from foreign countries as far as the direct spillover is concerned.However,FDI has no indirect spillover about improving the technological efficiency.Moreover,competitive pressure should not be too low or too high and the technological spillover is maximal when market share of foreign firms is 55%.Finally,exclusively foreign-owned enterprises and foreign shareholding enterprises are more efficient patterns of organization and they will improve the firm’s technological efficiency by 4.67% and 13.6% respectively.

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What this paper is about

This paper examined how FDI affects the technological efficiency of industrial firms in China through Stochastic Frontier Analysis based on the data of Chinese industrial firms from 2002 to 2006.The main conclusions includes: The firm’s technological efficiency will rise by 6.28% owing to FDI coming from foreign countries as far as the direct spillover is concerned.However,FDI has no indirect spillover about improving the technological efficiency.Moreover,competitive pressure should not be too low or too high and the technological spillover is maximal when market share of foreign firms is 55%.Finally,exclusively foreign-owned enterprises and foreign shareholding enterprises are more efficient patterns of organization and they will improve the firm’s technological efficiency by 4.67% and 13.6% respectively.

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Available abstract

This paper examined how FDI affects the technological efficiency of industrial firms in China through Stochastic Frontier Analysis based on the data of Chinese industrial firms from 2002 to 2006.The main conclusions includes: The firm’s technological efficiency will rise by 6.28% owing to FDI coming from foreign countries as far as the direct spillover is concerned.However,FDI has no indirect spillover about improving the technological efficiency.Moreover,competitive pressure should not be too low or too high and the technological spillover is maximal when market share of foreign firms is 55%.Finally,exclusively foreign-owned enterprises and foreign shareholding enterprises are more efficient patterns of organization and they will improve the firm’s technological efficiency by 4.67% and 13.6% respectively.

Key concepts: Spillover effect, Foreign direct investment, China, Business, Frontier, Industrial organization, Stochastic frontier analysis, Economics

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Research on the Spillover Effects of FDI on the Technical Efficiency of China's Industrial Enterprises——The Quantitative Analysis of Chinese Industrial Firms from 2002 to 2006 — Research Paper | ScholarLens