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

Author(s)
Chen, George
Yao, Yao
Malizard, Julien
Publication Date
2017
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.
Citation
Economic Modelling, v.61, p. 409-419
ISSN
1873-6122
0264-9993
Link
Publisher
Elsevier BV
Title
Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode
Type of document
Journal Article
Entity Type
Publication

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