题 目：The Knowledge Diffusion of Multinational Firms
Abstract: This paper investigates the effects of multinationals’ knowledge diffusion on domestic firms’ innovation activities, making use of China’s FDI deregulations in certain industries during its accession to WTO. By employing matched firm-level survey and patent application data in China over 1998-2007, we find that the FDI deregulation significantly increases domestic firm’s innovation. Moreover, this positive impact is more pronounced for relatively low-productivity firms, indicating a catching-up possibility of these firms in the long run. We further set up a resource misallocation model with three factors and quantify a 1.16% aggregate productivity gains from knowledge diffusion of multinational firms in China from 2001 to 2007.