Putting people first? Chinese state-owned enterprises' adjustment to globalisation

Sourafel Girma, Yundan Gong

Research output: Contribution to journalArticlepeer-review


This paper analyses the impact of FDI on the employment, productivity, profitability and survival performance of urban SOEs in China, with the aid of a rich panel data set over the period 1999–2005. Our estimation strategy controls for the endogeneity of a number of regressors and accounts for firm-level unobserved heterogeneity. Four key results emerge from the analysis: (i) Firmlevel foreign finance enhances the employment and productivity growth of SOEs, as well as their survival prospects; (ii) Competition from sectoral FDI has a deleterious impact on the growth and survival probability of SOEs without access to any foreign capital; (iii) Export-oriented FDI in downstream sectors has negative performance ramifications; and (iv) There are no discernible spillover effects that can be attributed to FDI in upstream sectors, suggesting limited linkages between multinational firms and SOEs.
Original languageEnglish
Pages (from-to)573-585
Number of pages13
JournalInternational Journal of Industrial Organization
Issue number2
Publication statusPublished - Mar 2008


  • FDI
  • employment
  • survival
  • productivity
  • SOE


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