How are Spillovers Influenced by the Different Ways Multinational Enterprises Organise Their Activities in the Host Country? Evidence in China

A growing body of evidence finds that spillovers from foreign presence is a significant contributor to productivity growth and overall economic performance of domestic firms in the host country. Spillovers occur where domestic firms have an opportunity to acquire some production advantages of foreign firms, through demonstration, labour movement or business linkages. Spillovers from foreign direct investment (FDI) play an important role in economic development in many host countries such as China. Recent decades have seen Chinese firms leverage multinational enterprises' activities to expand the indigenous capacity, improve the domestic productivity and enhance the export performance. The best Chinese firms are now launching their own branded products into the United States market. FDI therefore attracts the attention of both policy makers and academic researchers. The technological and geographic proximity between the FDI and the host country are often examined as determinants of spillovers to domestic firms. New data of FDI at the project level, however, shows that each multinational enterprise (MNE) undertakes a different mix of economic activities in the host country. My thesis contributes to the literature on spillovers from FDI by examining how the different ways MNEs organise their activities affect spillovers to domestic firms in China.