Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/22652
Appears in Collections:Management, Work and Organisation Journal Articles
Peer Review Status: Refereed
Title: Foreign direct investment industry characteristics and spillovers – a double mechanism model
Authors: Chen, Taotao
McQuaid, Ronald
Omar, Maktoba
Contact Email: ronald.mcquaid@stir.ac.uk
Keywords: FDI
Growth
China
Technology
Export
Intra-industry spillovers
Issue Date: 2015
Publisher: Emerald
Citation: Chen T, McQuaid R & Omar M (2015) Foreign direct investment industry characteristics and spillovers – a double mechanism model, Journal of Chinese Economic and Foreign Trade Studies, 8 (1), pp. 49-66.
Abstract: Purpose –  The purpose of this paper is to develop a double mechanism model to separate two foreign direct investment (FDI) intra-industry spillovers mechanisms: spillovers by FDI intensity and by FDI efficiency. This paper seeks to illustrate the potential use of the double mechanism model rather than provide precise estimates of spillovers. The evidence on the links between technology and the nature, size and mechanisms of FDI spillovers effects in economically developing countries is mixed.  Design/methodology/approach –  A model is developed and tested, in principle. Empirical testing was conducted in two steps. In the first step, the authors examined the effect of each influencing factor to FDI spillovers separately. To complete this step, the authors divided the whole sample industry into sub-groups and tested them with the double-mechanism using ordinary least squares regression. This study applies Chinese National Bureau of Statistics manufacturing industry level data, for the years 2000, 2001 and 2002, including the food industry, beverage industry, textile industry, textiles and garments, chemicals and chemical products industry, overall manufacturing equipment, special equipment, computer and other electronic equipment manufacturing industries. Findings –  The analysis suggests significant differences between types of spillovers: export orientation of domestic firms mainly influences FDI spillovers by intensity; the capability gap between local and foreign firms influences spillovers by efficiency; and the growth of local firms influences both types of spillovers. This paper develops existing models of FDI and suggests that disaggregating spillovers types may provide important theoretical and policy insights.  Originality/value –  This study has found, first, that compared with the classic single mechanism model, the double mechanism model is more appropriate for testing FDI intra-industry spillovers, as it is able to separate spillovers by intensity and spillovers by efficiency, which are shown as two distinct mechanisms for FDI spillovers. This allows a deeper analysis into each mechanism and the identification of relevant influencing factors.
Type: Journal Article
URI: http://hdl.handle.net/1893/22652
DOI Link: http://dx.doi.org/10.1108/JCEFTS-02-2015-0006
Rights: The publisher does not allow this work to be made publicly available in this Repository. Please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study.
Affiliation: Tsinghua University
Management Work and Organisation
Edinburgh Napier University

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