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Quantifying Foreign Direct Investment Productivity Spillovers In China: A Computable General Equilibrium Model., Ziliang Deng, Rod Falvey, Adam Blake

Rodney Falvey

For the purposes of this study, we will construct a static monopolisticallycompetitive computable general equilibrium model to quantify the endogenous productivity spillovers from foreign and domestic firms, using the Chinese economy as a case study. Our simulation results indicate: (i) that the net spillover effects are positive in terms of national total output, GDP and welfare; (ii) that both state-owned and privately-owned firms benefit, but that private firms benefit more; (iii) that industries with large volumes of foreign direct investment (FDI) do not necessarily observe the largest spillover effects; and (iv) that the spillover effects become more prominent when the …