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Productivity spillovers from foreign direct investment in New Zealand

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Listed:
  • Tinh Doan
  • David Mar�
  • Kris Iyer

Abstract

This paper examines whether foreign direct investment (FDI) has spillover effects on the productivity of domestic firms. Three types of potential spillovers are considered: horizontal (within industry), backward (foreign-owned customers) and forward (foreign-owned suppliers). The study uses data on a 10-year panel of firms and covers almost all business sectors in the New Zealand economy from 2000 to 2010. Panel methods are used to control for firm heterogeneity and the endogeneity of FDI. Separate estimates are obtained by industry group and by firm size. We find little evidence of substantial positive spillover effects from FDI to local firms' productivity. The presence of foreign-owned customers lifts productivity among small domestic firms and those in the primary sector, though the effects are small.

Suggested Citation

  • Tinh Doan & David Mar� & Kris Iyer, 2015. "Productivity spillovers from foreign direct investment in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(3), pages 249-275, August.
    • Handle: RePEc:taf:nzecpp:v:49:y:2015:i:3:p:249-275
    DOI: 10.1080/00779954.2014.945229
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    References listed on IDEAS

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    1. Theodore H. Moran, 1998. "Foreign Direct Investment and Development: The New Policy Agenda for Developing Countries and Economies in Transition," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 53, October.
    2. Theodore H. Moran, 2001. "Parental Supervision: The New Paradigm for Foreign Direct Investment and Development," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa64, October.
    3. Svejnar, Jan & Terrell, Katherine & Gorodnichenko, Yuriy, 2007. "When Does FDI Have Positive Spillovers? Evidence from 17 Emerging Market Economies," CEPR Discussion Papers 6546, C.E.P.R. Discussion Papers.
    4. Blomström, Magnus, 2002. "The economics of international investment incentives," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34904, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    Cited by:

    1. Richard Fabling & David C Maré, 2015. "Production function estimation using New Zealand’s Longitudinal Business Database," Working Papers 15_15, Motu Economic and Public Policy Research.
    2. Ryota Nakatani, 2019. "Firm performance and corporate finance in New Zealand," Applied Economics Letters, Taylor & Francis Journals, vol. 26(13), pages 1118-1124, July.
    3. David C. Maré & Dean R. Hyslop & Richard Fabling, 2017. "Firm productivity growth and skill," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(3), pages 302-326, September.
    4. Richard Harris & Trinh Le, 2019. "Absorptive capacity in New Zealand firms: Measurement and importance," Science and Public Policy, Oxford University Press, vol. 46(2), pages 290-309.
    5. Paul Conway, 2018. "Can the Kiwi Fly? Achieving Productivity Lift-off in New Zealand," International Productivity Monitor, Centre for the Study of Living Standards, vol. 34, pages 40-63, Spring.
    6. Rama, Ruth, 2023. "Technological Transfer Channels of Food and Beverage Processing Multinationals to Host Countries: An Empirical Analysis," MPRA Paper 118162, University Library of Munich, Germany.
    7. Paul Conway, 2016. "Achieving New Zealand's productivity potential," Working Papers 2016/01, New Zealand Productivity Commission.
    8. Sarker, Bibhuti & Serieux, John, 2022. "Foreign-invested and domestic firm attributes and spillover effects: Evidence from Brazil," Journal of Multinational Financial Management, Elsevier, vol. 63(C).
    9. Ebghaei, Felor, 2015. "Yabancı İştirakli Firmaların İhracat Yöneliminin Doğrudan Yabancı Sermaye Yatırımlarının Dikey Yayılmaları Üzerindeki Etkileri: Türkiye İmalat Sanayi Örneği [Effect of Firm’s Export-Orienteation on," MPRA Paper 77893, University Library of Munich, Germany, revised Mar 2017.
    10. Ebghaei, Felor & Akkoyunlu Wigley, Arzu, 2015. "Yabancı İştirakli Firmaların İhracat Yöneliminin Doğrudan Yabancı Sermaye Yatırımlarının Dikey Yayılmaları Üzerindeki Etkileri: Türkiye İmalat Sanayi Örneği [Effect of Firm’s Export-Orienteation on," MPRA Paper 77954, University Library of Munich, Germany, revised Mar 2017.

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