| dc.description.abstract | This paper provides empirical evidence on the relationship between FDI in China and the production performance of Taiwan ’s parent company. Base on the data from Taiwan Economic Journal of firms listed on Taiwan Stock Exchange from 1997 to 2005, and FDI in China collected by the Ministry of Economic Affairs. This study is divided into two parts: In the first part, China′s direct investment is regarded as an exogenous variable, which is estimated by a fixed effect model. In the other one, direct investment in China is regarded as an endogenous variable, and the change of Taiwan ’s investment policy in 2001 is regarded as an exogenous shock of foreign investment to deal with the potential endogenous problems of manufacturers ’self-selection. The empirical result of the first part finds that the higher the intensity of Chinese investment by manufacturers, the positive effect on firm’s productivity; however, it only reveals when the total factor productivity as the dependent variable is statistically. On the other hand, when labor productivity is seen as the dependent variable, it is not statistically significant. However, after controlling the effect of manufacturers′ self-selection, more the investment in China, the more positive and significant effects on manufacturers productivity. According to the results of the two regression models, this study finds that regardless of the potential endogenous, the higher the investment intensity in China, the company can create better production performance. | en_US |