Foreign Entry and Heterogeneous Growth of Firms: Do We Observe 'Creative Destruction' in China?

Paul Duo Deng, Gary H. Jefferson

Publikation: Working paperForskning

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Abstrakt

We adopt the framework of Schumpeterian creative destruction formalized by Aghion et al. (2009) to analyze the impact of foreign entry on the productivity growth of domestic firms. In the face of foreign entry, domestic firms exhibit heterogeneous patterns of growth depending on their technological distance from foreign firms. Domestic firms with smaller technological distance from their foreign counterparts tend to experience faster productivity growth, while firms with larger technological distance tend to lag further behind. We test this hypothesis using a unique firm-level data of Chinese manufacturing. Our empirical results confirm that foreign entry indeed generates strong heterogeneous growth patterns among domestic firms.
OriginalsprogEngelsk
Udgivelses stedFrederiksberg
UdgiverDepartment of Economics. Copenhagen Business School
Antal sider29
StatusUdgivet - 2012
NavnMPRA Paper
Nummer51163

Emneord

  • Firm Heterogeneity
  • Creative Destruction
  • Productivity Growth
  • FDI
  • Competition
  • Chinese Economy

Citationsformater

Deng, P. D., & Jefferson, G. H. (2012). Foreign Entry and Heterogeneous Growth of Firms: Do We Observe 'Creative Destruction' in China? Department of Economics. Copenhagen Business School. MPRA Paper, Nr. 51163 https://mpra.ub.uni-muenchen.de/51163/1/MPRA_paper_51163.pdf