Outward Direct Investment and Export Quality Upgrading:Empirical Evidence from China

Yu Jingwen, Peng Hongfeng, Li Mengxi

The Journal of World Economy ›› 2021, Vol. 44 ›› Issue (1) : 54-80.

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The Journal of World Economy ›› 2021, Vol. 44 ›› Issue (1) : 54-80.

Outward Direct Investment and Export Quality Upgrading:Empirical Evidence from China

  • Yu Jingwen1, Peng Hongfeng2, Li Mengxi3
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Abstract

Since the belt and road initiative (BRI) was launched, China's scale of outward direct investment (ODI) has shown a significantly growing trend. In this context, we might wonder:what kind of influence can ODI have on the Chinese economy, especially in its current stage of declining potential economic growth? This paper attempts to use the propensity score matching and the difference-in-differences techniques to investigate the ODI effect on product quality upgrading based on a combined dataset formed from the Chinese Industrial Enterprises database, Chinese Customs database and Chinese firms' ODI information database. The results show that:first, ODI can significantly facilitate export product quality upgrading; second, the ODI quality upgrading role is more prominent in differentiated and general trade commodities; third, there is a heterogeneous effect on ODI according to its different business scope. ODI with a production and manufacturing business scope has a significant impact on export product quality upgrading, while presenting it in acquiring market information, R&D, and commerce and sales has no impact. Finally, the ODI reverse technology spillover effect is further reflected in improving firm innovation capabilities based on the complexity of existing production technologies rather than increasing the productive technological complexity itself.

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outward direct investment / quality upgrading / reverse technology spillovers / difference-in-differences method

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Yu Jingwen, Peng Hongfeng, Li Mengxi. Outward Direct Investment and Export Quality Upgrading:Empirical Evidence from China[J]. The Journal of World Economy, 2021, 44(1): 54-80

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