Promoting exports - The role of inward FDI in China

Since the late 1970s, exports and inward foreign direct investment (FDI) in China have risen dramatically under the open-door policy. The critical rol e of FDI in China's exports may be indicated by the fact that exports by fo reign affiliates in China in 1998 were US$81 billion, comprising 44% of Chi na's total exports in that year. While there is considerable evidence on th e FDI export linkage in China, systematically empirical analyses have been limited. This paper investigates the issue using panel data at the provinci al level in the period of 1986-1997. The findings support the widely held b elief that increased levels of FDI positively affect provincial manufacturi ng export performance. (C) 2001 Elsevier Science Inc. All rights reserved.