Technology Spillover Effects of China's Investment in Malaysia Under the Belt and Road Initiative: Evidence from Listed Companies (Journal of Economics Finance and Management Studies)

Summary

• The study uses a difference-in-differences method on Chinese A-share listed company investment data and local Malaysian firm-level data.p.1
• The sample is an unbalanced panel of 5,186 firm-year observations covering 468 local firms, observed from 2013 to 2024.p.7
• The treatment group has 187 firms and the control group has 281 firms.p.7
• With industry-by-year fixed effects, the DID coefficient is 0.057 (p < 0.01), and productivity of exposed local firms rises by about 5.9% relative to the control group.p.8
• The DID coefficient is 0.103 in high-tech industries but only 0.036 in traditional manufacturing.p.9
• The DID coefficient is 0.071 in West Malaysia but only 0.018 and insignificant in East Malaysia.p.10

Key insights

1. Chinese investment in Malaysia generates a significant positive technological spillover on local enterprises, with industrial linkage the dominant channel.p.1
2. Column (1) with only firm and year fixed effects gives a DID coefficient of 0.078 (p < 0.01).p.8
3. The productivity gain of exposed local firms is equivalent to 7.7% of one standard deviation of TFP.p.8
4. The LINK coefficient is 0.121 in high-tech industries versus 0.052 in traditional manufacturing.p.9
5. The interaction term DID x HighTech is 0.067 (p < 0.05), supporting stronger spillovers in high-tech industries.p.9
6. A one-standard-deviation increase in human capital raises the spillover by about 56% of its baseline level, and institutional quality by about 47%.p.10
7. Using the Callaway and Sant'Anna estimator, the average treatment effect is 0.049 (p < 0.01).p.10
8. Private enterprises have replaced state-owned enterprises as the main force of Chinese investment in Malaysia.p.4