Publication

This paper investigates the link between inward foreign direct investment (FDI) and innovation activity in China. The authors pay particular attention to the impact of domestic access to finance. They conclude that firms with foreign capital participation or those with good access to domestic bank loans innovate more than others do. The paper also finds that inward FDI at the sectoral level is positively associated with domestic innovative activity only if firms engage in their own research and development, or if they have good access to domestic finance.