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Spillover Effects of Foreign Direct Investment: How do Region-Specific Institutions Matter?

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Abstract

This study examines the role of region-specific institutions in explaining foreign direct investment (FDI) spillovers. The findings reveal that domestic firms in different regions of China do not equally benefit from inward FDI. Firms that operate in regions with higher levels of intellectual property right protection, market development and international openness are better able to absorb spillovers and improve their productivity. By demonstrating how subnational location-bound institutions influence the spillover effects of FDI, the paper extends prior literature that largely focuses on either firm- and industry-specific determinants or on country-level institutional idiosyncrasies.

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Acknowledgments

This research is supported by National Natural Science Foundation of China (Grant No. 71003102 and Grant No. 71373010) and Beijing Higher Education Young Elite Teacher Project (Grant No. YETP0221).

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Yi, J., Chen, Y., Wang, C. et al. Spillover Effects of Foreign Direct Investment: How do Region-Specific Institutions Matter?. Manag Int Rev 55, 539–561 (2015). https://doi.org/10.1007/s11575-014-0235-2

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