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Vertical Spillovers from Multinational Enterprises: Does Technological Gap Matter?

Author

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  • Rosanna Pittiglio
  • Filippo Reganati
  • Edgardo Sica

Abstract

Foreign direct investment (FDI) from Multinational enterprises (MNEs) can augment the productivity of domestic firms insofar as knowledge “spills over” from foreign investors to local producers. The capacity of local companies to exploit knowledge from MNEs can be affected by the technology gap between foreign and local enterprises at both horizontal (in the same industry) and vertical (in different industries) level. Whereas most of the empirical literature has focused exclusively on the analysis of horizontal and backward spillovers (i.e. between MNEs and local suppliers), the present paper also examines the relationship between FDI-related spillovers and technological gap in the Italian manufacturing sector at forward level (i.e. between MNEs and local buyers). Results suggest that at both intra-industry and forward level, the technological gap is of considerable importance for the spillover effect, particularly in the case of low-medium gap. Key words: Foreign direct investment, Multinational enterprises, Vertical spillovers, Horizontal spillovers, Technological gap.JEL: F21, F23.

Suggested Citation

  • Rosanna Pittiglio & Filippo Reganati & Edgardo Sica, 2016. "Vertical Spillovers from Multinational Enterprises: Does Technological Gap Matter?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(3), pages 313-323.
    • Handle: RePEc:voj:journl:v:63:y:2016:i:3:p:313-323:id:27
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    Keywords

    Foreign direct investment; Multinational enterprises; Vertical spillovers; Horizontal spillovers; Technological gap;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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