Does the high-tech foreign investment spark robot adoption in the developing world? Evidence from China

Abstract

With the intensification of transnational economic activities, industrial robots have been making inroads into developing countries. However, few studies have analyzed how foreign direct investment (FDI) affects the diffusion of industrial robots among domestic enterprises in developing countries. To bridge the gap, we combine several datasets to empirically examine the causal relationship between high-tech FDI and the robot adoption by domestic manufacturers in China. We discover a significantly positive impact of high-tech FDI on the adoption of industrial robots by domestic manufacturers, evidenced by the expansion in both stock and flow, as well as an increase in the variety of robots. Mechanism tests indicate that this effect can be achieved through both proactive learning and absorption of external technology, as well as through passive participation in more intense market competition. Moreover, the impact of high-tech FDI on robot adoption is more salient among enterprises with stronger absorptive capacity as well as those characterized by lower labor intensity and higher energy intensity.