Outward FDI and Domestic Input Distortions: Evidence from Chinese Firms*
No. E2016001 February
February 3, 2016
Abstract. This study examines how domestic distortions affect firms’ investment strategies abroad. The study first documents puzzling empirical findings concerning Chinese multinational corporations, which include that private multinational corporations are less productive than state-owned multinational corporations. A theoretical model is built to rationalize these findings and yields additional empirical predictions that are consistent with the initial empirical findings. The key insight is that discrimination against private firms domestically incentivizes these firms to produce abroad, which results in less tough selection into foreign direct investment for them. A calibration exercise shows the quantitative impacts of domestic distortions on gains in aggregate productivity after investment liberalization.
JEL: F13, O11, P51.
Keywords: Outward FDI, Multinational Firms, Institutional Distortion, State-owned Enterprises
讨论稿全文： Outward FDI
* We thank Jim Anderson, Pol Antràs, Sam Bazzi, Svetlana Demidova, Ding Xiang, Martin Fiszben, Taiji Furusawa, Ben Li, Chang-Po Li, Marc Melitz, Nina Pavcnik, John Ries, Chang Sun, Stephen Terry, Daniel Xu, and Stephen Yeaple for their insightful comments. We thank seminar participants at BC, BU, CUFE, Histotsubashi, HKU, McMaster, Penn State, PKU, and the CCER Yantai conference for their very helpful suggestions and comments. Cheng Chen thanks IED of Boston University for their hospitality when the paper was written. Wei Tian and Miaojie Yu thank Histotsubashi Institute of Advanced Studies for their hospitality when the paper was written. However, all errors are ours.
+ School of Economics and Finance, University of Hong Kong. Email: email@example.com.
z School of International Trade and Economics, University of International Business and Economics, Beijing, China. Email: firstname.lastname@example.org.
x China Center for Economic Research (CCER), National School of Development, Peking University, Beijing 100871, China. Email: email@example.com.