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FDI and productivity growth: the role of inter‐industry linkages

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  • Yanling Wang

Abstract

There is a large literature on the effects of foreign direct investment (FDI) on productivity through inter‐industry economic linkages. This paper contributes to the literature by focusing on the developed economy of Canada. It finds that FDI generates strong effects on total factor productivity (TFP) growth through both forward and backward inter‐industry linkages, and increase in an industry's absorptive capacity raises the effects of FDI on TFP growth through forward inter‐industry linkages. For R&D intensive industries, the effects of FDI on TFP growth through inter‐industry linkages are small, but imports turn out to be an important source for TFP growth. Il existe une vaste littérature sur les effets de l’investissement direct de l’étranger (IDE) sur la productivité par le truchement des liens interindustriels. Ce mémoire porte sur l’économie canadienne. On montre que l’IDE a des effets importants sur la croissance de la productivité totale des facteurs de production (PTF) via les liens interindustriels en aval et en amont, et que l’accroissement dans la capacité d’absorption d’une industrie accroît les effets de l’IDE sur la PTF via les liens interindustriels en aval. Pour les industries à forte intensité de R&D, les effets de l’IDE sur la croissance de la PTF via les liens interindustriels sont faibles, mais les importations sont une source importante de croissance de la PTF.

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  • Yanling Wang, 2010. "FDI and productivity growth: the role of inter‐industry linkages," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(4), pages 1243-1272, November.
    • Handle: RePEc:wly:canjec:v:43:y:2010:i:4:p:1243-1272
    DOI: 10.1111/j.1540-5982.2010.01613.x
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    4. Nizam, Ahmed Mehedi, 2023. "FDI, exchange rate and firm's gain in terms of real assets," MPRA Paper 119597, University Library of Munich, Germany.
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    6. Balistreri, Edward J. & Olekseyuk, Zoryana & Tarr, David G., 2016. "The Impact of WTO Accession and Complementary Structural Reforms on the Economy of Belarus: A Quantitative Evaluation," Conference papers 332696, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Pooja Thakur & L.G. Burange, 2016. "An Analysis of Productivity Spillovers from Foreign Direct Investment in India’s Services Sector," Foreign Trade Review, , vol. 51(4), pages 271-286, November.
    8. Shimaa Elkomy & Hilary Ingham & Robert Read, 2021. "The Impact of Foreign Technology and Embodied R&D on Productivity in Internationally Oriented and High-Technology Industries in Egypt, 2006–2009," Journal of Industry, Competition and Trade, Springer, vol. 21(2), pages 171-192, June.
    9. Shimaa Elkomy & Hilary Ingham & Robert Read, 2020. "The Impact of Foreign Technology & Embodied R&D On Productivity in Internationally-Oriented & High-Technology Industries in Egypt, 2006-2009," Working Papers 293574925, Lancaster University Management School, Economics Department.
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    11. Urata, Shujiro & Baek, Youngmin, 2022. "Technology Spillover and Absorptive Capacity of Firms and Countries," ADBI Working Papers 1323, Asian Development Bank Institute.

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