Technological upgrading in Chinese cities: the roles of FDI, pace and rhythm

ABSTRACT

Previously, most literature has argued that FDI spillovers are dependent upon the degree of foreign presence in host regions, but often neglected FDI expansion time-based characteristics’ roles. This paper therefore develops the constructs of pace and rhythm as key features of foreign expansion process. It moves the concept of time compression diseconomies beyond the firm level to cities, and hopes to investigate how technological upgrading in one region is influenced by the FDI expansion process. Based on the panel data set of 244 Chinese cities over 2004–2011, our results illustrate that irregular and unpredictable foreign expansions significantly diminish FDI spillovers in Chinese cities, and it also directly impedes technological upgrading in local area. Rapid foreign expansion process itself impedes technological upgrading, but it significantly enhances technology transfers and disseminations of FDI in Chinese cities. Moreover, this paper also provides implications to contribute to the theoretical framework, and helps policy-makers’ decision-making.

KEYWORDS:

• Foreign direct investment (FDI)
• technological upgrading
• pace
• rhythm
• Chinese cities

JEL:

• F23
• O33
• O53
• R12
• R58

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Xin Pan is a PhD candidate at the Queen Mary University of London. His research interests focus on R&D internationalization, and regional innovation systems. He has previously published in the Journal of Technology Transfer, Management Decision, Technovation and Technological Forecasting and Social Change.

Dr. Fan Wang (PhD, London, UK) is a researcher at China Center for Information Industry Development in Beijing. His research focuses on the area of innovation in emerging contexts. He has previously published in Journals such as Research Policy and China Economic Review.

Dr. Lutao Ning (PhD, Cambridge, UK) is a Reader in International Business at the School of Business and Management, Queen Mary University of London. His research focuses on the area of international technology management and innovation and business strategy in an emerging market context. He has previously published in Journals such as Research Policy, Technovation, Scientometrics, International Business Review and Regional Studies.

Additional information

Funding

This work was supported by China Scholarship Council [grant number 201408060255].