Spillover Effect of FDI on Food Exports: Based on Firm-Level Analysis in China

This paper examines the spillover effect of foreign direct investment (FDI) on Chinese domestic food exports under firm heterogeneity. By using a rich firm-level panel data of China’s food firms, the empirical analyses rely on the first-order difference generalized method of moments (GMM) for indust...

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Bibliographic Details
Published inSustainability Vol. 13; no. 9; p. 4818
Main Authors Jin, Yue, Chen, Chen, Shi, Zhanyi
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.05.2021
Subjects
Agricultural commodities
Datasets
Developing countries
Econometrics
Exports
Food
Food industry
Food processing industry
Foreign investment
Heterogeneity
International trade
LDCs
Method of moments
Productivity
Statistical analysis
Sustainable development
Transition economies
China
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Summary:This paper examines the spillover effect of foreign direct investment (FDI) on Chinese domestic food exports under firm heterogeneity. By using a rich firm-level panel data of China’s food firms, the empirical analyses rely on the first-order difference generalized method of moments (GMM) for industry-level analysis, and Heckman’s two-stage method for firm-level analysis. The results show that the horizontal FDI led to a positive spillover effect on domestic food industry exports, varying across food subindustries. The paper also finds that a large part of the promotion effect is driven through extensive margin (the probability to export) instead of intensive margin (the quantities of exports) in firm-level analysis. The heterogeneous export spillovers across food firms are further considered to depend on their nature characteristics, like productivity, size, and ownership. Moreover, the heterogeneities of FDI origins and business purpose are confirmed to influence export spillovers. The estimation results are quite robust for different types of regression specifications and substitutions of variable measurement. These findings provide suggestions for decision-makers to carefully assess the impact of FDI and make policy for the sustainable development of domestic food exports.
ISSN:2071-1050
2071-1050
DOI:10.3390/su13094818