China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?

China has become leading recipients of foreign direct investment (FDI). Meanwhile, an increasing share of global FDI is going to many Central and Eastern European countries (CEECs). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to thr...

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Main Authors:	Fung, K.C., Korhonen, Iikka, Li, Ke, Ng, Francis
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Trade Policy International Trade Organizations F130 Country and Industry Studies of Trade F140 International Investment Long-term Capital Movements F210 Multinational Firms International Business F230 Transactional Relationships Contracts and Reputation Networks L140 International Linkages to Development Role of International Organizations O190 Socialist Institutions and Their Transitions: Financial Economics P340
Online Access:	http://hdl.handle.net/10986/5757

id	okr-10986-5757
recordtype	oai_dc
spelling	okr-10986-57572021-04-23T14:02:23Z China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors? Fung, K.C. Korhonen, Iikka Li, Ke Ng, Francis Trade Policy International Trade Organizations F130 Country and Industry Studies of Trade F140 International Investment Long-term Capital Movements F210 Multinational Firms International Business F230 Transactional Relationships Contracts and Reputation Networks L140 International Linkages to Development Role of International Organizations O190 Socialist Institutions and Their Transitions: Financial Economics P340 China has become leading recipients of foreign direct investment (FDI). Meanwhile, an increasing share of global FDI is going to many Central and Eastern European countries (CEECs). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: (1) China and the CEECs each exist in its own regional production network, with no linkage between FDI flows into China and into CEECs; (2) China and the CEECs together comprise a global production network, so that China's FDI is positively related to CEECs' FDI; and (3) FDI into China is a substitute for FDI into the CEECs, with the correlation being negative. In this paper, we study empirical estimates of this issue for 15 CEECs for 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some regressions FDI flows in these two regions are moderately complementary. Our analysis also confirms the importance for FDI flows of determinants such as market size, degree of trade liberalization, labor quality and a healthy global FDI supply. 2012-03-30T07:34:24Z 2012-03-30T07:34:24Z 2009 Journal Article Journal of Economic Integration 1225651X http://hdl.handle.net/10986/5757 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Trade Policy International Trade Organizations F130 Country and Industry Studies of Trade F140 International Investment Long-term Capital Movements F210 Multinational Firms International Business F230 Transactional Relationships Contracts and Reputation Networks L140 International Linkages to Development Role of International Organizations O190 Socialist Institutions and Their Transitions: Financial Economics P340
spellingShingle	Trade Policy International Trade Organizations F130 Country and Industry Studies of Trade F140 International Investment Long-term Capital Movements F210 Multinational Firms International Business F230 Transactional Relationships Contracts and Reputation Networks L140 International Linkages to Development Role of International Organizations O190 Socialist Institutions and Their Transitions: Financial Economics P340 Fung, K.C. Korhonen, Iikka Li, Ke Ng, Francis China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?
geographic_facet	China
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	China has become leading recipients of foreign direct investment (FDI). Meanwhile, an increasing share of global FDI is going to many Central and Eastern European countries (CEECs). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: (1) China and the CEECs each exist in its own regional production network, with no linkage between FDI flows into China and into CEECs; (2) China and the CEECs together comprise a global production network, so that China's FDI is positively related to CEECs' FDI; and (3) FDI into China is a substitute for FDI into the CEECs, with the correlation being negative. In this paper, we study empirical estimates of this issue for 15 CEECs for 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some regressions FDI flows in these two regions are moderately complementary. Our analysis also confirms the importance for FDI flows of determinants such as market size, degree of trade liberalization, labor quality and a healthy global FDI supply.
format	Journal Article
author	Fung, K.C. Korhonen, Iikka Li, Ke Ng, Francis
author_facet	Fung, K.C. Korhonen, Iikka Li, Ke Ng, Francis
author_sort	Fung, K.C.
title	China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?
title_short	China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?
title_full	China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?
title_fullStr	China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?
title_full_unstemmed	China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?
title_sort	china and central and eastern european countries : regional networks, global supply chain or international competitors?
publishDate	2012
url	http://hdl.handle.net/10986/5757
_version_	1764396198646513664

China and Central and Eastern European Countries : Regional Networks, Global Supply Chain or International Competitors?

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