How and By How Much does Foreign Direct Investment Increase the Productivity of Domestic Firms?
AbstractWe analyze productivity spillovers from MNC subsidiaries to domestic Romanian companies, both within (horizontal spillovers) and across industries (vertical spillovers). We separate labor market spillovers from other horizontal spillovers and define the supply-backward linkage spillover that runs from foreign investors over domestic suppliers to local users of domestic inputs. In our panel of Romanian firms, labor market effects differ from other horizontal effects, vertical spillovers dominate horizontal spillovers and the newly defined supply-backward spillover is economically and statistically significant. The spillovers studied raise total factor productivity between 20% and 50% in the period 1998-2001, depending on the firm’s initial level of technology.
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Bibliographic InfoPaper provided by Hogeschool-Universiteit Brussel, Faculteit Economie en Management in its series Working Papers with number 2008/39.
Length: 34 pages
Date of creation: Sep 2008
Date of revision:
FDI; spillovers; absorptive capability; firm size; ownership structure;
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- F2 - International Economics - - International Factor Movements and International Business
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