Are FDI spillovers regional? Firm-level evidence from China

▶ There are significant positive spillovers of FDI in China. ▶ These spillovers are likely to be regional: Chinese firms benefit more from the presence of foreign firms in the same sector within the same region. ▶ Chinese firms differ significantly in the extent to which they benefit from FDI, though domestic firms with high absorptive capacity are more likely to benefit from FDI.