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FDI Spillovers and the Timing of Foreign Entry

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  • Bruno Merlevede
  • Koen Schoors
  • Mariana Spatareanu

Abstract

This study analyzes the dynamic effect of FDI on local firms’ productivity by relaxing the standard implicit assumption that technological spillovers are immediate and permanent. We find that the entry of majority foreign owned firms has a short run negative effect on the productivity of local competitors, which is more than offset by a longer run positive effect. The entry of minority foreign owned firms has an immediate, though short-lived, positive effect on local suppliers through backward linkages. The entry of majority foreign owned firms also improves the productivity of local suppliers, but the effect materializes later and lasts longer.

Suggested Citation

  • Bruno Merlevede & Koen Schoors & Mariana Spatareanu, 2010. "FDI Spillovers and the Timing of Foreign Entry," LICOS Discussion Papers 26710, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    • Handle: RePEc:lic:licosd:26710
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    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp267.pdf
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    References listed on IDEAS

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    Cited by:

    1. Jude, Cristina, 2012. "FDI, Productivity and Wages. New Evidence from a Romanian Matched Sample," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 36-55, December.
    2. Laura Casi & Laura Resmini, 2014. "Spatial complexity and interactions in the FDI attractiveness of regions," Papers in Regional Science, Wiley Blackwell, vol. 93, pages 51-78, November.

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    More about this item

    Keywords

    FDI; spillovers; dynamics; timing;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business

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