FDI Spatial Spillovers in China

This paper studies FDI spatial spillovers in China. Empirical investigation reveals that, along the spatial dimension, FDI presence tends to generate negative intra-regional spillovers that dominate other potential positive externalities. The direction, magnitude and scope of inter-regional spillovers vary, depending on the spillover channels. Our empirical findings call for a rethinking of policy-driven agglomeration among indigenous firms and MNEs in developing countries