The impact of FDI on the productivity of domestic firms: the case of China

This paper expands existing international business literature by examining the impact of FDI on domestic firms. It investigates how FDI affects the productivity of domestic firms in China. The results show that FDI may exert a different impact on firms at the regional level than it does on firms at the industrial level. Domestic firms in regions that attract more FDI or have a longer history of FDI tend to have higher productivity, while domestic firms in industries that have more FDI or have a longer history of FDI tend to have lower productivity. Based on these findings, implications for local governments and foreign investors are discussed.