¹Nottingham University Business School, Nottingham, UK

Correspondence: Dr X Tian, Nottingham University Business School, China House, Lenton Fields, University Park, University of Nottingham, Nottingham NG7 2RD, UK. Tel: +44 (0) 115 846 7948; Fax: +44 (0) 115 846 6324; E-mail: Xiaowen.Tian@nottingham.ac.uk

Received 3 May 2004; Revised 13 December 2005; Accepted 13 December 2005; Published online 14 December 2006.

Abstract

Using a set of panel data of 11,324 firms in China from 1996 to 1999, the paper finds that positive technology spillovers from FIEs to domestic firms occur through tangible assets rather than intangible assets, through domestically consumed products rather than exported products, through 'traditional' products rather than new products, and through FIEs employing unskilled workers rather than FIEs employing skilled workers. FIEs are found to generate negative spillovers through exports and through employment of skilled workers.