UNU-MERIT Working Papers Series
FDI, R&D and Innovation Output in the Chinese Automobile Industry
Fang Chen & Pierre Mohnen #2009-044After joining the World Trade Organization (WTO), China witnessed a major inflow of Foreign
Direct Investment (FDI). Many famous automobile firms of developed countries were attracted
to invest in China to cooperate with domestic firms. This paper uses firm-level data of the
Chinese automobile industry to analyze the determinants of, and the interrelationships between,
innovation input and innovation output, and in particular whether FDI had any influence on these
two aspects of innovation. A generalized tobit model will be estimated for both R&D and the
share of innovative sales for 2002/2003 and 2005/2006. The findings show that FDI firms are
less R&D intensive but, when they innovate in new products, they are more product innovative
than domestic-funded firms.
Keywords: FDI, China, R&D, innovation, automobile industry
JEL codes: O14, L62, F21
UNU-MERIT Working Papers
ISSN 1871-9872
Download the working paper (PDF)
