How colonial legacy shapes the impact of inward FDI on GDP? Evidence from China

ABSTRACT

Using panel data covering 30 provinces from 2000 to 2016, we study how colonization shapes the effect of inward FDI (foreign direct investment) on GDP in China. We find that western colonization influence strengthens the positive effect of inward FDI on GDP by approximately 4–5% whereas the Japanese colonization influence overturns such effect with a negative impact around minus 20%.

KEYWORDS:

• Colonial legacy
• inward FDI
• GDP

JEL CLASSIFICATION:

• P33
• P50

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The colonization detail is as follows: Beijing (International legation quarter, 1861–1945; Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Liaoning (British, Russian and Soviet Union concession in Dalian, respectively, 1858–1860, 1898–1905 and 1945–1955; Japanese south Manchukuo in Kwantung leased territory, 1897–1943; Japanese Liaodong Peninsula, 1894–1895; Japanese-controlled Manchukuo, 1931–1945); Guangdong (French concession in Kouang-Tcheou-Wan, 1898–1946; British concession in Shamian, Guangzhou, 1861–1945; British concession in Zhanjiang, 1861–1929); Hubei (British, German, French and Russian concession in Hankou, respectively, 1861–1927, 1985–1917,1896–1946 and 1896–1924; Japanese concession in Hankou, 1898–1943; Japanese concession in Shashi, 1898–1943; Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Yunnan (French railway Kunming, 1904–1940; British Tengchong, late 19th – 1935); Shandong (German Tsingdao, 1898–1914; British and Japanese concession in Weihai, respectively, 1898–1930 and 1895–1898; British Liugong island, 1930–1940; Japanese Kiautschou Bay leased territory, 1914–1922; Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Shanghai (British, American and French concession in Shanghai, respectively, 1846–1863, 1848–1863 and 1849–1946; Shanghai International settlement, 1863–1945; Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Jiangxi (British concession in Jiujiang, 1861–1927; Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Tianjin (British, American, French, German, Japanese, Russian, Italian, Austria-Hungarian and Belgian concession in Tianjin, respectively, 1860–1943, 1860–1902, 1861–1946, 1895–1917, 1898–1943, 1900–1924, 1901–1947 and 1902–1931; Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Fujian (British concession in Amoy, 1852–1930; International Gulangyu island, 1903–1945; Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Chongqing (Japanese concession in Chongqing, 1897–1943); Zhejiang (Japanese concession in Hangzhou, 1897–1943); Jilin (Japanese-controlled Manchukuo, 1931–1945); Heilongjiang (Russian railway, Harbin, 1896–1952; Japanese-controlled Manchukuo, 1931–1945); Inner Mongolia (Japanese-controlled Manchukuo, eastern Inner Mongolia, 1931–1945); Jiangsu (Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Hunan (Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Guangxi (Japanese occupation in 2nd Sino-Japanese War, 1937–1945); Hebei (Japanese occupation in 2nd Sino-Japanese War, 1937–1945), Guizhou (Japanese occupation in 2nd Sino-Japanese War, 1937–1945).