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Testing Backward Linkages Of Fdi In China, Zhuomin Liu
Testing Backward Linkages Of Fdi In China, Zhuomin Liu
Theses & Dissertations
Inward FDI (Foreign Direct Investment) affects productivity of local industries through three channels- direct effects, horizontal spillovers, and vertical linkages. This study focuses on the backward linkages of FDI in the 28 two-digit manufacturing sectors in China, as well as their horizontal and forward linkage effects. Two related tests, firm level pooled data test 1999-2002 and industrial level panel data test 1994-2003 are conducted to investigate whether backward linkages from multinational buyers brings productivity gain to local suppliers. Firm level tests provide convincing evidence that increase backward linkage of FDI will lead to productivity gains. This includes not only total …