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Effects of Foreign Presence in a Transition Economy: Regional and Industrywide Investments and Firm-Level Exports in Ukrainian Manufacturing

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Author Info

  • Stefan Lutz
  • Oleksandr Talavera
  • Sang-Min Park

Abstract

We investigate the effects of regional and industrywide foreign presence and foreign direct investment (FDI) on the export volumes of Ukrainian manufacturing firms using unpublished panel data from 1996-2000. Foreign presence through FDI may have negative competition effects on domestic firms' performance; at the same time, domestic firms' productivity may be increased by technology transfer or training and demonstration effects. From a Cournot competition model that includes negative competition and positive technology spillover effects, we hypothesize that foreign presence and FDI might positively affect domestic firms' output and exports. Our estimation results support these hypotheses, suggesting in particular that large firms and durable goods producers benefit most from foreign presence and investments.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 44 (2008)
Issue (Month): 5 (September)
Pages: 82-98

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Handle: RePEc:mes:emfitr:v:44:y:2008:i:5:p:82-98

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

Related research

Keywords: firm performance; foreign direct investment; spillovers; transition;

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References

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  1. Koen De Backer & Leo Sleuwaegen, 2003. "Does Foreign Direct Investment Crowd Out Domestic Entrepreneurship?," Review of Industrial Organization, Springer, vol. 22(1), pages 67-84, February.
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  4. Georges SIOTIS, 1996. "Foreign Direct Investment Strategies and Firms' Capabilities," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9626, Université de Lausanne, Faculté des HEC, DEEP.
  5. Talavera, Oleksandr & Lutz, Stefan H., 2003. "Do Ukrainian Firms Benefit from FDI?," ZEW Discussion Papers 03-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Noorbakhsh, Farhad & Paloni, Alberto & Youssef, Ali, 2001. "Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence," World Development, Elsevier, vol. 29(9), pages 1593-1610, September.
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  15. Smarzynska, Beata K., 2002. "Does foreign direct investment increase the productivity of domestic firms : in search of spillovers through backward linkages," Policy Research Working Paper Series 2923, The World Bank.
  16. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "learning-by-exporting" important? Micro-dynamic evidence from Colombia, Mexico and Morocco," Finance and Economics Discussion Series 96-30, Board of Governors of the Federal Reserve System (U.S.).
  17. Caves, Richard E, 1974. "Multinational Firms, Competition, and Productivity in Host-Country Markets," Economica, London School of Economics and Political Science, vol. 41(162), pages 176-93, May.
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Citations

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Cited by:
  1. Iwasaki, Ichiro & Csizmadia, Péter & Illéssy, Miklós & Makó, Csaba & Miklós Szanyi, 2010. "Foreign Direct Investment, Information Spillover, and Export Decision : The Concentric-Circle Model with Application to Hungarian Firm-Level Data," Discussion Paper Series a527, Institute of Economic Research, Hitotsubashi University.
  2. repec:hal:journl:halshs-00469544 is not listed on IDEAS
  3. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
  4. Maryia Akulava & Ganna Vakhitova, 2010. "The Impact of FDI on Firm’s Performance Across Sectors: Evidence from Ukraine," Discussion Papers 26, Kyiv School of Economics.
  5. Liza Rybina & James Reardon & Janet Humphrey, 2010. "Patriotism, Cosmopolitanism, Consumer Ethnocentrism and Purchase Behavior in Kazakhstan," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 1(2).

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