The ‘insider’ and ‘outsider’ effects of FDI technology spillovers: Some evidence from China

Extant studies on FDI technology spillovers have reached inconclusive findings, indicating that the effect of FDI technology spillovers is likely to be contingent on a variety of factors. The present paper argues that one of the likely contingent factors is the distinction between FDI as an insider and FDI as an outsider to individual domestic firms. For instance, FDI in industry A is considered as insider FDI by domestic firms in industry A, but outsider FDI by domestic firms in industry B. Similarly, FDI in location X is considered as insider FDI by domestic firms in location X, but outsider FDI by domestic firms in location Y. Most extant studies failed to make this distinction. To fill this research gap, the present paper distinguishes industrial outsider FDI technology spillovers from industrial insider FDI technology spillovers on the one hand, and regional outsider FDI technology spillovers from regional insider FDI technology spillovers on the other. The study develops hypotheses, and tests them against firm-level data of the National Industrial Enterprise Survey compiled by the China National Bureau of Statistics.