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This paper employs a firm-level panel data set for a high-tech cluster in the People's Republic of China to examine knowledge spillovers from multinational enterprises (MNEs) to domestic firms, focusing on the role of MNEs' employment of educated workers. The authors found that knowledge within MNEs spills over to domestic firms in the same industry through MNEs' employment of workers with graduate-level or overseas education. They also found that Japanese MNEs contribute less to knowledge spillovers than United States MNEs.
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