The effects of inward and outward foreign direct investment on manufacturing export sophistication in China

ABSTRACT

This article focuses on the effects of inward and outward FDI on manufacturing export sophistication in China by using the two-tier stochastic frontier model. The results show that inward and outward FDI has a stronger positive effect on China’s manufacturing export sophistication. Furthermore, the effects decomposition indicates that the net effect of inward and outward FDI on manufacturing export sophistication varies markedly across quantiles and regions. At the upper quartiles (Q3) and Eastern Zone, the positive net effect is more obvious than others. This illustrates that inward and outward FDI plays a significant role in driver export upgrading.

KEYWORDS:

• Manufacturing export sophistication
• foreign direct investment
• technology spillover
• two-tier frontier model
• China

JEL CLASSIFICATION:

• F21
• F41
• F14
• L60
• O33

Disclosure statement

There is no conflict of interest to report by the authors.

Notes

¹ For details, see Kumbhakar and Parmeter (2009) and Parmeter (2018).

Additional information

Funding

This work was supported by the PhD Graduate Innovation Project of Xinjiang University under Grant number XJUBSCX-2016003; and Graduate student“Silk Road”Innovation Fund Projectof Xinjiang University under Grant number JGSL17005.