• Josh Lerner
  • David Yang


November 28, 2023, Paper: "Global high-potential entrepreneurship was traditionally dominated by rich countries, especially the US, until the rise of China as a venture capital powerhouse. We explore the international ramifications of China’s rise, using comprehensive data on global venture activities. We document three sets of findings. First, as the Chinese venture industry rose in importance, investment increased substantially in other emerging markets, particularly in sectors dominated by Chinese companies. Using a broad set of country-level economic and social indicators, we show that this effect was driven by country-sector pairs most similar to their counterparts in China. Second, turning to mechanisms, we show that the increase in venture investments in emerging economies was spurred by local investors and new firms whose business models more closely resembled those of their Chinese counterparts. The findings are not driven by Chinese investors, by countries politically connected to China, or by sectors prioritized by the Chinese government. Third, we find that this growth in emerging-market investment had positive spillovers on sectors in which China was not a global leader and had positive city-level effects on both business formation and patenting. Taken together, our findings suggest that developing countries benefited from the rise of Chinese entrepreneurship, especially where Chinese businesses and technologies were most “appropriate” for local economic conditions."