Impact of outward FDI on firms’ productivity over the food industry: evidence from China
China Agricultural Economic Review
ISSN: 1756-137X
Article publication date: 26 June 2019
Issue publication date: 18 October 2019
Abstract
Purpose
The purpose of this paper is to study the impact of outward foreign direct investment (OFDI) on the productivity of parent firms over the food industry.
Design/methodology/approach
The main data in this paper are derived from the China Industrial Enterprise Database 2005–2013 and a data set of Chinese firms’ OFDI information. Then this paper uses propensity score matching to match the treatment and control groups with firm characteristics and combines that with the differences-in-differences method to estimate the real effect of OFDI on total factor productivity.
Findings
The food firm’s OFDI significantly improves the parent firm’s productivity (known as the OFDI own-firm effect), but this promotion only exists in the short term. The OFDI own-firm effect of food firms differs remarkably as the sub-sectors, regions and ownership of firms vary. The food firm’s OFDI in “non-tax havens” and high-income destinations has a significantly stronger effect on the parent firm’s productivity. FDI, R&D and exporting can effectively strengthen the OFDI own-firm effect of food firms.
Originality/value
The effect of OFDI on food industry productivity has not been researched yet. This paper aims to fill this gap. This paper further divides the characteristics of food firms into different sub-sectors, regions and ownership types for a comparative analysis, with the aim of conducting a more comprehensive study at the micro-level of firms. In addition, an investigation into which factors influence the degree of the OFDI own-firm effect at the micro-level has not been found in the literature. This paper will draw its own conclusions.
Keywords
Citation
Chen, T.-g., Lin, G. and Yabe, M. (2019), "Impact of outward FDI on firms’ productivity over the food industry: evidence from China", China Agricultural Economic Review, Vol. 11 No. 4, pp. 655-671. https://doi.org/10.1108/CAER-12-2017-0246
Publisher
:Emerald Publishing Limited
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