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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)

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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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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
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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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Related research
Keywords: DYNREG; foreign direct investment; transition countries; spillovers;

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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  5. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," NBER Working Papers 8724, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Andres Rodriguez-Clare & Laura Alfaro, 2004. "Multinationals and Linkages: An Empirical Investigation," 2004 Meeting Papers 145, Society for Economic Dynamics. [Downloadable!]
  7. Laura Resmini, 1999. "The Determinants of Foreign Direct Investment into the CEECs: New Evidence from Sectoral Patterns," LICOS Discussion Papers 8399, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
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  8. Gorg, Holger & Strobl, Eric, 2001. "Multinational Companies and Productivity Spillovers: A Meta-analysis," Economic Journal, Royal Economic Society, vol. 111(475), pages F723-39, November. [Downloadable!] (restricted)
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  10. Fazia Pusterla & Laura Resmini, 2005. "Where do foreign firms locate in transition Countries? An empirical investigation," ISLA Working Papers 20, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy, revised Sep 2005. [Downloadable!]
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  17. Djankov, Simeon & Hoekman, Bernard M, 2000. "Foreign Investment and Productivity Growth in Czech Enterprises," World Bank Economic Review, Oxford University Press, vol. 14(1), pages 49-64, January.
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  20. Giovanni Peri, 2004. "Catching-Up to Foreign Technology? Evidence on the "Veblen-Gerschenkron" Effect of Foreign Investments," NBER Working Papers 10893, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. Mansfield, Edwin & Romeo, Anthony, 1980. "Technology Transfer to Overseas Subsidiaries by U.S.-Based Firms," The Quarterly Journal of Economics, MIT Press, vol. 95(4), pages 737-50, December. [Downloadable!] (restricted)
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Cited by:
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  1. Hugo Rojas-Romagosa, 2006. "Productivity Effects of FDI Inflows: A Literature Review," CPB Memoranda 170, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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