FDI, linkages and the efficiency of state-owned enterprises in China

Sourafel Girma, Yundan Gong

Research output: Contribution to journalArticlepeer-review


As China seeks to consolidate its position as an emerging global economic power, reforming the largely inefficient state-owned enterprises (SOEs) presents a major challenge. Using a comprehensive micro data set, we investigate whether SOEs in China have benefited from the managerial, technical and organisational skills possessed by multinational firms operating in the economy, and conclude that the evidence in favour of positive spillovers is not overwhelming. Limited regional linkages and low level of absorptive capacity are found to be the main reasons for this disappointing performance. Policy makers involved in the reform of SOEs should ensure that managers have the right incentives to make long-term investment in absorptive capacity development.
Original languageEnglish
Pages (from-to)728-749
Number of pages22
JournalJournal of Development Studies
Issue number5
Publication statusPublished - May 2008


  • China
  • n emerging global economic power
  • reform
  • state-owned enterprises
  • multinational firm


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