TY  - JOUR
AU  - Whalley,John
AU  - Xin,Xian
TI  - China's FDI and Non-FDI Economies and the Sustainability of Future High Chinese Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12249
PY  - 2006
Y2  - May 2006
UR  - http://www.nber.org/papers/w12249
L1  - http://www.nber.org/papers/w12249.pdf
N1  - Author contact info:
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca

Xian Xin
College of Economics
and Management
China Agricultural University
Beijing, P.R. China
E-Mail: xinxian@cau.edu.cn
M2  - featured in NBER digest on 2006-05-22
AB  - This paper presents assesses of the contribution of inward FDI to China%u2019s recent rapid economic growth using a two stage growth accounting approach. Recent econometric literature focuses on testing whether Chinese growth depends on inward FDI rather than measuring the contribution. Foreign Invested Enterprises (FIEs), often (but not exclusively) are joint ventures between foreign companies and Chinese enterprises, and can be thought of as forming a distinctive subpart of the Chinese economy. These enterprises account for over 50% of China%u2019s exports and 60% of China%u2019s imports. Their share in Chinese GDP has been over 20% in the last two years, but they employ only 3% of the workforce, since their average labor productivity exceeds that of Non-FIEs by around 9:1. Their production is more heavily for export rather than the domestic market because FIEs provide  access to both distribution systems abroad and product design for export markets. Our decomposition results indicate that China%u2019s FIEs may have contributed over 40% of China%u2019s economic growth in 2003 and 2004, and without this inward FDI, China%u2019s overall GDP growth rate could have been around 3.4 percentage points lower. We suggest that the sustainability of both China%u2019 export and overall economic growth may be questionable if inward FDI plateaus in the future.
ER  -