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Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data

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  • Fredrik Sjoholm

Abstract

Direct foreign investment (DFI) has been argued to be an important channel for international technology diffusion. This has led to extensive liberalisation of DFI regimes in many developing countries, including in Indonesia. Using detailed micro-data from the Indonesian manufacturing sector, we examine the effect on productivity from DFI. The results show DFI to benefit locally-owned establishments, but the effect differs between groups of industries. Spillovers from DFI are found in sectors with a high degree of competition. Moreover, it seems that the larger the technology gap between domestic and foreign establishments, the larger the spillovers.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00220389908422611
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 36 (1999)
Issue (Month): 1 ()
Pages: 53-73

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Handle: RePEc:taf:jdevst:v:36:y:1999:i:1:p:53-73

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  1. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February.
  2. Wang, Jian-Ye & Blomstrom, Magnus, 1992. "Foreign investment and technology transfer : A simple model," European Economic Review, Elsevier, vol. 36(1), pages 137-155, January.
  3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  4. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-77, July.
  5. Lapan, Harvey & Bardhan, Pranab, 1973. "Localized technical progress and transfer of technology and economic development," Journal of Economic Theory, Elsevier, vol. 6(6), pages 585-595, December.
  6. Magnus Blomstrom & Ari Kokko & Mario Zejan, 1995. "Host Country Competition and Technology Transfer by Multinationals," NBER Working Papers 4131, National Bureau of Economic Research, Inc.
  7. Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April.
  8. Findlay, Ronald, 1978. "Relative Backwardness, Direct Foreign Investment, and the Transfer of Technology: A Simple Dynamic Model," The Quarterly Journal of Economics, MIT Press, vol. 92(1), pages 1-16, February.
  9. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
  10. Ari Kokko, 1996. "Productivity spillovers from competition between local firms and foreign affiliates," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(4), pages 517-530.
  11. Blomstrom, Magnus & Persson, Hakan, 1983. "Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the Mexican manufacturing industry," World Development, Elsevier, vol. 11(6), pages 493-501, June.
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