The impact of OFDI on skill-biased technological change in China's manufacturing: Evidence from the Belt and Road Initiative

The Belt and Road Initiative (BRI) is a key platform for China to deepen economic cooperation and promote shared development with participating countries. This paper develops a general equilibrium model with production and R&D sectors and biased technological change to examine how OFDI to BRI countries affects skill-biased technological change (SBTC) in China's manufacturing industry. Using provincial-level manufacturing panel data for 2007-2021, the study finds that technological change in China's manufacturing industry is gradually shifting toward skilled labor, and that gradient-conforming OFDI to BRI countries significantly promotes SBTC. Mechanism analysis shows that industrial structure upgrading and R&D scale expansion serve as mediating channels. Heterogeneity analysis indicates that this effect is stronger for OFDI directed toward middle-development-level BRI countries and is more pronounced in China's coastal and BRI provinces. Further analysis shows that stronger policy coordination with BRI countries, greater local government attention to the BRI, and improved intellectual property protection significantly amplify the SBTC-promoting effect of gradient-conforming OFDI. These findings provide empirical evidence and policy implications for leveraging the BRI's resource advantages to foster SBTC.