Negative productivity spillovers and socially responsible investment: The case of FDI in China
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A widening gap between the rich and the poor is found in most, if not all, developing countries that have recently opened up to FDI and is threatening the sustainability of economic progress in these countries. The study finds strong evidence that FDI contributes to the widening gap between rich and poor regions through negative productivity spillovers in a large developing country, and provides some theoretical explanations. The study discusses implications of the findings for transnational corporations in making socially responsible investment and for developing countries in attracting foreign investors to poor regions.
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