Industry technology performance of manufacturing FDI: micro-level evidence from joint ventures in China

Recent literature showed that foreign direct investment (FDI) especially from developed countries was claimed to facilitate technology flows into the recipient country via technology upgrade and R&D spillover activities. However, little research has been conducted at the disaggregate (firm - industry) level through which technology is transferred. This research investigates the industry technology performance of joint ventures in China and its sources and how structural (institutional) factors of these foreign investments would affect technology progress using micro- (firm) level data. Research results showed that FDI by type of foreign ownership affected TFP progress and growth while capital intensity and its nested effect with market share, were also important in enhancing production efficiency. Industry characteristics also made a difference. Implications derived for FDI absorption on the part of the recipient country and managerial investment decisions of foreign firms in China were discussed.