Speaker: Gary Jefferson, Brandais University
Abstract: With China being the largest recipient of FDI in the developing world, research on the spillover effects of FDI in China has also expanded greatly. A review of the literature shows strikingly little consensus regarding the existence and nature of these spillovers. This paper posits that the main reason for these disparate results is the wide range of hypothesis specification, modeling methods, data, and econometric strategies used to conduct the studies. The paper reviews these different approaches that include such differences as reliance on primal versus dual functional forms, focus on spillovers that operate through horizontal versus vertical channels or exhibit neutral versus factor-biased impacts, and various specifications of the nature of firm heterogeneity relating to the recipient firms. The paper seeks to sort results that are contradictory and those that are consistent and conclude by summarizing what we know about FDI spillovers in China as well as the implications for on-going research strategy.