|執筆者||Nannan Lundin, Fredrik Sjoholm, Ping He, Jinchang Qian|
FDI can be an important channel for developing countries’ ability to get access to new technology. The impact of FDI on domestically-owned firms’ technology development is less examined but it is frequently argued that technology externalities or demonstration effects could have a positive impact. Another and so far little examined effect of FDI on technology development in domestically owned firms is through the impact on competition. We examine the effect of FDI on competition in the Chinese manufacturing sector and the effect of competition on firms’ R&D. Our analysis is conducted on a large data set including all Chinese large and medium sized firms over the period 1998-2004. Our results show that FDI increase competition but there are no strong indications that competition affects investments in R&D.