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Productivity spillovers through backward linkages: The role of the origin of investors and absorptive capacity of domestic firms

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  • Ousmanou Njikam
  • Roland Rostant Njiteu Leudjou

Abstract

We argue that multinationals from different home countries have different technologies and input sourcing behavior. These differences impinge on potential productivity spillovers through backward linkages of multinationals and such effects also differ across host local firms depending on their absorptive capacity. Using a panel of Cameroonian manufacturing firms over the period 1993 to 2005, we find supportive evidence of these arguments. There is a negative relationship between the presence of American and European affiliates in downstream sectors and the productivity of Cameroonian firms in the supplying industries and a positive correlation in the case of Asian affiliates. The absorptive capacity of Cameroonian firms mainly explains these divergent results.

Suggested Citation

  • Ousmanou Njikam & Roland Rostant Njiteu Leudjou, 2019. "Productivity spillovers through backward linkages: The role of the origin of investors and absorptive capacity of domestic firms," Review of Development Economics, Wiley Blackwell, vol. 23(2), pages 677-701, May.
    • Handle: RePEc:bla:rdevec:v:23:y:2019:i:2:p:677-701
    DOI: 10.1111/rode.12579
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    Cited by:

    1. Issabayev, Murat & Pelzman, Joseph, 2019. "A model of FDI spillover in a natural resource rich LDC," Resources Policy, Elsevier, vol. 64(C).
    2. Moralles, Herick Fernando & Moreno, Rosina, 2020. "FDI productivity spillovers and absorptive capacity in Brazilian firms: A threshold regression analysis," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 257-272.
    3. Yoshimichi Murakami & Keijiro Otsuka, 2020. "Governance, Information Spillovers, and Productivity of Local Firms: Toward an Integrated Approach to Foreign Direct Investment and Global Value Chains," The Developing Economies, Institute of Developing Economies, vol. 58(2), pages 134-174, June.

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