| A Political Cycle of FDI Spillovers in Emerging Market: Evidence from China |
Received:October 15, 2017 Revised:October 15, 2017 |
Key Words: foreign direct investments, spillover effects, turnover of political leaders, emerging market |
| Author Name | Affiliation | | Can Li* | Peking University | | Danxue Gao | Central University of Finance and Economics | | Weiguo Zhong | Peking University |
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Abstract: |
| Extant literature provides inconclusive findings concerning the effects of FDI presence on domestic productivity, calling for more research into contingency factors of FDI spillover effects. This study extends the literature through identifying a political cycle in FDI spillovers corresponding with turnover of local political leaders. We argue that as newly appointed political leaders have strong incentive to promote local business development, they tend to devote tremendous efforts in facilitating knowledge spillover and alleviating competitive pressures from FDI. Using data on industrial firms and political leader turnovers in China’s municipal cities, we document strengthened spillover effects following turnover of political leaders, which is significant at both regional and national level. The effect is stronger for native politicians and state owned enterprises. |
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