This paper discusses whether the entry of foreign enterprises will affect the productivity of domestic enterprises in Zhejiang Province. Based on the regional perspective, using the micro-data of industrial enterprises in Zhejiang Province from 2002 to 2013, it is found that the entry of foreign capital in Zhejiang Province significantly improves the productivity of domestic enterprises, and this conclusion is still robust after changing the measurement method of enterprise total factor productivity, adjusting the core explanatory variable indicators, considering the dynamic trend and excluding the interference of enterprise entry and exit factors. Moreover, through the heterogeneity analysis, it is found that foreign investment has a more significant effect on the productivity improvement of private enterprises, capital-intensive enterprises and enterprises with high R&D investment. This paper affirms the role of foreign direct investment in improving the productivity of domestic enterprises, provides a reference for further promoting the opening up of foreign investment fields, and points out that China should build a good business environment to attract high-quality foreign investment, so as to boost the development of manufacturing enterprises.

Liu Ba. Study on the Influence of Foreign Direct Investment on the Productivity of Domestic Enterprises in Zhejiang Province. Academic Journal of Business & Management (2023) Vol. 5, Issue 24: 95-102. https://doi.org/10.25236/AJBM.2023.052414.

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