Globalization and regional industrial performance: Evidence from China

This study examines the role of globalization on industrial performance (IP) in China. Using the data on 21 manufacturing sectors in six years (2005-2010) for 31 provinces/regions, we construct four IP indicators to estimate how globalization influences China's industrial capacity and technological composition through foreign direct investment (FDI) and foreign trade. The panel estimating results suggest that both FDI and foreign trade generate strong positive effects on manufacturing output and manufacturing exports, but the contributions to industrial upgrading and technological complexity seem to be limited. At the regional level, the effect of FDI and trade on IP is numerically much smaller in the inland area than in the coastal area.