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Spillover effects of FDI on innovation in China : evidence from the provincial data
China Economic Review
  • Kui Yin CHEUNG, Lingnan University, Hong Kong
  • Ping LIN, Lingnan University, Hong Kong
Document Type
Journal article
Publication Date
  • FDI,
  • Patent,
  • Spatial effect,
  • Spillover
Foreign direct investment (FDI) can benefit innovation activity in the host country via spillover channels such as reverse engineering, skilled labor turnovers, demonstration effects, and supplier-customer relationships. Using provincial data from 1995 to 2000, we find positive effects of FDI on the number of domestic patent applications in China. This finding is robust under both pooled time-series and cross-section data estimation and panel data analysis and for different types of patent applications (invention, utility model, and external design). The spillover effect is the strongest for minor innovation such as external design patent, highlighting a "demonstration effect" of FDI.
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Copyright © 2003 Elsevier Inc

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Citation Information
Cheung, K.-y., & Lin, P. (2004). Spillover effects of FDI on innovation in China: Evidence from the provincial data. China Economic Review, 15(1), 25-44. doi: 10.1016/S1043-951X(03)00027-0