Shaosheng Jin a, Haiyue Guo b, Michael S. Delgado c, H. Holly Wangc,a,
a China Acadmy for Rural Development, School of Public Affairs, Zhejiang University, China
b School of Management, Zhejiang University, China
c Department of Agricultural Economics, Purdue University, USA
a r t i c l e i n f o
Article history:
Received 29 June 2016
Accepted 23 December 2016
Available online 5 January 2017
Keywords:
China
Food industry
Foreign direct investment (FDI)
Productivity spillovers
a b s t r a c t
We investigate the impact of foreign direct investment (FDI) on the total factor productivity of Chinese
food firms using firm-level census data between 1998 and 2007 (174,940 sample food firms). We test
for within-firm, within-industry, and vertical effects. We find that the effect of FDI on the productivity
of Chinese food firms depends significantly on the type of FDI and its countries of origin. FDI from
non-HMT (Hong Kong, Macaw and Taiwan) regions can improve the productivity of the invested firm,
and also increases the productivity of domestic food firms through vertical industry linkages. However,
domestic food firms may be crowded out by non-HMT investment in the same industry. HMT investment
can generate positive within-industry productivity spillovers, but negative vertical spillovers. Our findings
have immediate implications for policymakers in China, as well as for governments of less developed
countries that are formulating foreign investment policies.

2016 Published by Elsevier Ltd.