Foreign direct investment, access to finance, and innovation activity in Chinese enterprises

Arbeitspapier

This paper investigates the link between inward FDI and innovation activity in China, using a very comprehensive and recent firm level database. We pay particular attention to the impact of domestic access to finance. Our results show that firms with foreign capital participation or those with good access to domestic bank loans innovate more than others do. We also find that inward FDI at the sectoral level is positively associated with domestic innovative activity only if firms engage in own R&D or if they have good access to domestic finance. However, access to finance only plays a role for private or collectively owned firms, less so for state-owned enterprises. Furthermore, we distinguish the effect of sector level inward FDI into technology transfer and FDI affecting domestic credit opportunities and find that the latter is of very little significance for SOEs and is also independent of their access to finance. By contrast, it is an important channel through which FDI affects the innovation of domestic private and collectively owned enterprises.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 1400

Classification and Topics

• Classification: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Innovation and Invention: Processes and Incentives ; Multinational Firms; International Business
• Subject: FDI ; Finance ; China ; Innovation ; Innovation ; Industrielle Forschung ; Direktinvestition ; Technologietransfer ; Verschuldungsrestriktion ; China

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Girma, Sourafel ; Gong, Yundan ; Görg, Holger
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/4175
• Last update: 10.03.2025, 11:45 AM CET