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Can co-ordination advancement of two-way FDI improve resource misallocation? Evidence from 285 cities in China.

Authors :
Zhou, Shuo
Shao, Suqing
Source :
PLoS ONE. 7/8/2024, Vol. 19 Issue 7, p1-18. 18p.
Publication Year :
2024

Abstract

During the past 40 years of reform and opening-up, the implementation of an unbalanced enhancement strategy has led to severe resource misallocation, making the mitigation and rectification of this misallocation an urgent issue. This paper utilizes urban data from China between 2006 and 2020 to examine the impact of two-way foreign direct investment (FDI) on resource misallocation, as well as the pathways through which coordinated advancement of two-way FDI affects resource misallocation. After undergoing a series of robustness and endogeneity tests, the conclusion remains stable. Mechanism testing reveals that coordinated advancement of two-way FDI improves capital resource misallocation by enhancing the enhancement level of the financial industry, while exacerbating labor misallocation by increasing labor costs. This paper integrates the coordinated advancement of two-way FDI and resource misallocation into the same analytical framework, proposing policy recommendations to alleviate China's resource misallocation issue. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
19326203
Volume :
19
Issue :
7
Database :
Academic Search Index
Journal :
PLoS ONE
Publication Type :
Academic Journal
Accession number :
178313645
Full Text :
https://doi.org/10.1371/journal.pone.0304836