UROP Proceedings 2021-22

School of Business and Management Department of Economics 174 Firms in Globalization: Evidence from China Supervisor: LI Yao / ECON Student: LI Yuhe / RMBI Course: UROP2100, Fall To investigate the correlation between Foreign Direct Investment (FDI) and domestic firms’ productivity, this paper has the following three focuses, data cleaning, horizontal and vertical backward regression. We first dropped inappropriate observations from the CIE data, then converted the annual cross-sectional data into panel data. Then, we followed the standard approach by Jarvocik to calculate the horizontal and vertical backward proxies, with the use of the 2002 Chinese input-output table. For horizontal spillover effect, We obtained a mixed result of both negative and positive horizontal effects when adding different fixed effects compared to the negative horizontal effect in the previous works. For vertical backwards spillover effect, positive and significant coefficient was found, indicating the positive productivity spillover effect under foreign presence in the downstream industry. Firms in Globalization: Evidence from China Supervisor: LI Yao / ECON Student: LIAO Caixing / ECOF SU Xuanjing / ECOF Course: UROP2100, Fall UROP2100, Fall Following up on the aggregate level analysis in UROP 1100, this report proceeds to investigate whether there exists a trade diversion in China caused by the trade war starting from 2018. Based on monthly data of China’s export and import at the HS6 product level, this report adopts a reduced-form difference-indifferences framework in analysis. We separately study Chinese export diversions using US sanction lists and Chinese import diversions using China retaliation lists. We find significant trade diversion effects using some specific tariff lists but not all. Such heterogeneity in lists will be examined in future work. Firms in Globalization: Evidence from China Supervisor: LI Yao / ECON Student: LUK Wing Yiu / ECOF Course: UROP2100, Fall UROP3100, Summer This study focuses on the intra- and inter-industry productivity spillover by inward foreign direct investment (FDI) in China. Using the firm-level CIE panel data, I found the existence of positive productivity spillover by foreign investments excluding those from HK, Macau and Taiwan through backward and forward linkages. Lagged forward proxy is proved to be more predictive and accurate as compared to the contem poraneous proxy. Foreign participation in the same industry poses negative impact on the productivity growth of their domestic counterparts. Lastly, by separating the backward proxy, fully-owned and export-market oriented foreign firms are found to have positive impact on domestic productivity growth.