How China’s Investment Climate Affects Performance of FIEs

7月 21, 2016

in : 2006 , 2006-3

Bai Chong-En, Lu Jiangyong and Tao Zhigang

Abstract:

The paper studies the effects of investment climate (IC) on the performance of Foreign InvestedEnterprises (FIEs) using firm-level data in 44 cities in China. We find that IC has significant andpositive effects on the performance of FIEs. We also find that FIEs that have operated longer in China, and whose foreign investors have had more investments in China, rely less on IC. The results supportthe view that FIEs earn more profits under some circumstances, while only partially supporting the view that FIEs hide fewer profits under these circumstances.

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