Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode

George S. Chen; Yao Yao; Julien  Malizard

doi:10.1016/j.econmod.2016.11.005

Author(s)

George S. Chen
Yao Yao
Julien Malizard

Detail(s)

Original language	English
Pages (from-to)	409-419
Journal / Publication	Economic Modelling
Volume	61
Online published	24 Nov 2016
Publication status	Published - Feb 2017
Externally published	Yes

Link(s)

DOI	DOI https://doi.org/10.1016/j.econmod.2016.11.005 Final Published version
	Check@CityULib
Link to Scopus	https://www.scopus.com/record/display.uri?eid=2-s2.0-85007201323&origin=recordpage
Permanent Link	https://scholars.cityu.edu.hk/en/publications/publication(af7f0df5-3e88-4af4-9ed5-6a95a2cf249d).html

Abstract

Using quarterly data spanning from 1994Q1 to 2014Q4, we find a neutral relationship between foreign direct investment (FDI) and domestic investment in China. However, when we consider the entry mode chosen by foreign investors, we find that whilst equity joint venture (EJV) crowds in domestic investment, wholly foreign-funded enterprise (WFFE) crowds it out. Our results remain robust under alternative estimators and across different time periods. Based on these results, we argue that the Chinese government needs to actively promote the formation of EJV and uses it as the catalyst for industrial upgrading in the economy.

Research Area(s)

Foreign direct investment, Entry mode, ARDL bounds test, Domestic investment, China

SDG 17 - Partnerships for the Goals

Citation Format(s)

[ RIS ] [ BibTeX ]

Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode. / Chen, George S.; Yao, Yao; Malizard, Julien .
In: Economic Modelling, Vol. 61, 02.2017, p. 409-419.

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

Chen, GS, Yao, Y & Malizard, J 2017, 'Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode', Economic Modelling, vol. 61, pp. 409-419. https://doi.org/10.1016/j.econmod.2016.11.005

Chen, G. S., Yao, Y., & Malizard, J. (2017). Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode. Economic Modelling, 61, 409-419. https://doi.org/10.1016/j.econmod.2016.11.005

Chen GS, Yao Y, Malizard J. Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode. Economic Modelling. 2017 Feb;61:409-419. Epub 2016 Nov 24. doi: 10.1016/j.econmod.2016.11.005

Chen, George S. ; Yao, Yao ; Malizard, Julien . / Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode. In: Economic Modelling. 2017 ; Vol. 61. pp. 409-419.