NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Ethnicity Pay

Yasheng Huang, Li Jin, Yi Qian

NBER Working Paper No. 16294
Issued in August 2010
NBER Program(s):   PR

Most of the economic analyses of the overseas-Chinese network focus on trade and investment flows at the country level. In this paper, we analyze the effects of the ethnic Chinese network at the firm level. Contrary to the conventional wisdom, we find that ethnic-Chinese FDI firms in China in fact underperform non-ethnic-Chinese FDI firms. We also find that the performance of ethnic-Chinese firms deteriorates over time. We present evidence consistent with the hypothesis that ethnic-Chinese firms under-invest in those firm attributes that may enhance long-term performance, such as human capital and technology. Our findings raise both empirical and normative implications of ethnic ties.

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This paper was revised on February 15, 2013

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Document Object Identifier (DOI): 10.3386/w16294

Published: Huang, Yasheng, Li Jin and Yi Qian. 2013. Does Ethnicity Pay? Evidence From Overseas Chinese Fdi In China. The Review of Economics and Statistics. 95(3): 868–883

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