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Study on Impacts of FDI on Competitiveness of China's Food Industries

As the competitiveness of China's food industries tends to decrease year by year, the effects of foreign direct investment (FDI) on the competitiveness improvement is investigated for a sample of China's food industries. Estimates of labor productivity in domestic owned plants are constructed and employed as the dependent variable. The capital intensity and plant-scale economies in domestic owned plants and the amount of foreign ownership in China's food industries are included among the independent variables in the estimating equations. The labor productivity is found to be positively related to the amount of foreign ownership in China's food industries. However, the fact that the major technology obtained by domestic owned enterprises is the outdated technology shows that the impacts of FDI on the competitiveness improvement of China's food industries may be smaller than expected. Meanwhile, the long-term dependence on the technology importation is bad for the competitiveness improvement. Only by combining the importation and learning of foreign technology with the independent innovation, can the competitiveness of China's food industries be improved.