How Does Foreign Direct Investment Affect Industry Growth? -Evidence in Chinese Industry-level Data-

초록

Foreign direct investment has been known to be the most important factor in the growth of a country. China is a good example of how foreign direct investment can contributes to national economic growth. A key question arising from this phenomenon is whether foreign direct investment can also facilitate industry growth. This paper presents empirical evidence of the effect of foreign direct investment on industry growth. For this purpose, it uses panel data pertaining to Chinese 36industry sectors over the 1999-2009 period. Evidence indicates that foreign direct investment which is measured in terms of the foreign-held share of total assets has made great contribution to Chinese industrial growth. However, the absorptive capability of human capital that makes FDI more productive in generating output was not found in China. Nonetheless, we find a very weak evidence of absorptive capability as China enters the WTO.

키워드