FDI Export Spillover: Extended Analysis From Enterprises To Industries

The spillover effect of FDI (foreign direct investment) firms on local ones' export behavior has become a new topic of trade economic studies in recent years. Based on the fact that China has a large scale of FDI inflow, this paper sums up the enterprise-level mechanism of export spillover and extends this mechanism analysis to industry-level empirical research. According to the empirical results, this paper studies the strengrth, channels and characteristics of Chinese FDI export spillover and explores the reasons behind.Based on previous literatures and case study, this paper sums up the enterprise-level FDI export spillover mechanism, namely horizontal FDI export spillover and vertical FDI export spillover. Specifically, the former includes increased competition in the domestic market, export information externalities and demonstration effects, referring to the export spillover that happens between enterprises of the same industry. While, the latter includes forward spillover and backward spillover, referring to the export spillover that happens between enterprises of different industries. The integation of the above two indicates that compared with horizontal direction FDI export spillover is more likely to happen in vertical direciton.Through empirical study, this paper extends the enterprise-level mechanism to industry level. On the basis of correlation analysis on our countty's FDI infow and domestic enterprises' export, manufacturing industry was picked up as the typical industry for empirical test. Firstly, the overall sample is estimated. Secondly, this paper respectively estimates two groups of sub-industries, which are divided according to whether the FDI enterprises of each sub-industry are export-oriented or not. The empirical results show that, FDI export spillover really exists, increased competition in the domestic market is the most important effect among horizontal ones, forward export spillover only roots in industries of which the FDI enterprises are host market-seeking, and backfward export spillover happens evidently in each sub-industry. Finally, this paper concludes with recommendations accordingly.