The Spillover Effects of International Co-production in the Chinese Film Industry

Abstract

This study examines the spillover effects of international film co-production using data on films released in the Chinese mainland from 2006 to 2018. The results indicate that local film producers can enhance their product performance by leveraging the expertise and practices of more sophisticated foreign firms during international co-productions. Heterogeneous effects were observed related to budget size, firm size, ownership structure, and cultural distance. These spillover effects can occur through two mechanisms: the demonstration effect (the adoption of more advanced technology) and the labor mobility effect (actors or directors upgrading their skills). An instrumental variable approach is employed to address endogeneity concerns. This study contributes to the spillover effects of international co-production, which has been neglected in the literature. Its empirical findings suggest that engaging in international co-production can potentially boost productivity for firms from developing countries. Host country governments may consider offering preferential policies to promote international co-production as an alternative to foreign direct investment (FDI), thereby fostering positive spillover effects.