FDI technology spillovers, geography, and spatial diffusion

This paper investigates the geographic extent of FDI technology spillovers and associated spatial diffusion. By adopting a spatiotemporal autoregressive panel model as the platform of our study, the complex impact resulting from FDI penetration is separated into spatial direct and indirect effects w...

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Bibliographic Details
Published in:International review of economics & finance 2016-05, Vol.43, p.257-274
Main Authors: Lin, Mi, Kwan, Yum K.
Format: Article
Language:English
Subjects:
Chinese economy
Econometrics
FDI spillovers
Foreign investment
Geography
Knowledge sharing
Market penetration
Spatial diffusion
Spatial dynamic panel
Studies
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Summary:This paper investigates the geographic extent of FDI technology spillovers and associated spatial diffusion. By adopting a spatiotemporal autoregressive panel model as the platform of our study, the complex impact resulting from FDI penetration is separated into spatial direct and indirect effects while accounting for feedback loops among regions. A set of spatially partitioned summary measures is produced to identify and to quantify FDI spillovers from different channels with distinct geographic scopes. Empirical results based on data from China document that the direct impacts of FDI presence to a specific location itself are likely to be negative. Domestic firms mainly benefit from FDI presence in their neighboring regions through knowledge spillovers that have wider geographic scope. Negative market stealing effect nevertheless has no spatial boundary. Policy implications of these findings are discussed.
ISSN:1059-0560
1873-8036
DOI:10.1016/j.iref.2016.02.014