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Productivity Spillovers from Foreign Investment: The Role of Neglected Conditionalities

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Author Info

  • Resmini, Laura

    ()
    (ISLA, Bocconi University, Milan)

  • Nicolini, Marcella

    ()
    (ISLA, Bocconi University, Milan)

Abstract

offered significant incentives in order to attract foreign direct investments (FDI), being motivated to do so by expectations of possible spillover benefits. Using an unbalanced panel of firm level data in Bulgaria, Poland and Romania over the 1995-2003 period, we examine the impact of foreign firms on domestic firms’ productivity. In particular, we try to answer the following research questions: 1) Are there any spillover effects of FDI, and if so, are they positive or negative? 2) Are spillover effects more likely to occur within or across sectors? 3) Are the existence, the direction and the magnitude of spillovers conditioned by region, sector and firm-specific characteristics? Our findings show that FDI spillovers do exist both within and across complementary manufacturing sectors, and that inter-sectoral spillovers dominate intra sectoral effects. More interestingly, we find that geography, technological content of foreign firms’ production, and domestic firm size are all factors able to condition the exploitation of productivity spillovers. Although these results should be interpreted with caution, they provide a good starting point for further research in this area.

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Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG11.

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Length: 27 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:esr:wpaper:dynreg11

Note: DYNREG Research Project – Dynamic Regions in a Knowledge-Driven Global Economy: Lessons and Policy Implications for the European Union
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Keywords: DYNREG; foreign direct investment; transition countries; spillovers;

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References

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Cited by:
  1. Simona, Gentile-Lüdecke & Axèle, Giroud, 2012. "Knowledge Transfer from TNCs and Upgrading of Domestic Firms: The Polish Automotive Sector," World Development, Elsevier, vol. 40(4), pages 796-807.
  2. Joze P. Damijan & Matija Rojec & Boris Majcen & Mark Knell, 2008. "Impact of Firm Heterogeneity on Direct and Spillover Effects of FDI: Micro Evidence from Ten Transition Countries," LICOS Discussion Papers 21808, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  3. Hugo Rojas-Romagosa, 2006. "Productivity Effects of FDI Inflows: A Literature Review," CPB Memorandum 170, CPB Netherlands Bureau for Economic Policy Analysis.

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