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1 |
ID:
113012
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Publication |
2012.
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Summary/Abstract |
Does foreign direct investment (FDI) into developing countries affect the growth of local firms in host countries? Using a dataset of 38 sectors in China's electrical and electronics industry, in this paper, we analyze whether FDI has a positive effect on local firms, with technology spillovers, added value and increasing total factor productivity, or a negative, market stealing, effect. Estimating the relationship between growth of local firms and investment of foreign firms, our results show that FDI is likely to have a negative impact on the growth of local firms in sectors with large disparities in technology and less experience in business. Therefore, local firms lacking in technology need to find markets with no competition from foreign firms or determine strategies to compensate technology disparities.
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2 |
ID:
106920
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Publication |
2011.
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Summary/Abstract |
We have examined the way in which local firms in China's handset industry, confronted with a technology gap, have achieved growth, using the concept of boundaries of the firm. Chinese local firms have lacked technology, and have therefore turned to outside firms for development, design, and manufacturing in some cases. On the other hand, they themselves have focused on sales and marketing, using their advantage of familiarity with the home market. Consequently, by establishing a growth condition in which their selection of boundaries counterbalances the technology gap, they have been able to expand their market shares in comparison with foreign firms.
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