Do Foreign Dollars Discourage Entrepreneurship?: FDIs Impact on Small Businesses in China,Used

Do Foreign Dollars Discourage Entrepreneurship?: FDIs Impact on Small Businesses in China,Used

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SKU: DADAX3845471980
Brand: LAP Lambert Academic Publishing
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Despite the Chinese governments aims to attract FDI in order to build up the domestic economy, FDIs actual impact on entrepreneurship and net firm creation in China remains uncertain. This paper attempts the first nationalscale empirical test on FDIs effect on small domestic firms in China. Fixedeffects regressions are run on a comprehensive dataset of 214 prefectures in 1999 and 2003. The analysis shows a significant tradeoff between FDI and small domestic firms in 1999 that then turns positive in 2003. The remainder of the paper tests three hypotheses to explain this change in FDIs effect over time and find that competitive shock and FDI preferential policies are the main reasons for the tradeoff between FDI and entrepreneurship in China.

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