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Catching-Up to Foreign Technology? Evidence on the "Veblen-Gerschenkron" Effect of Foreign Investments

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Giovanni Peri

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Abstract

The presence of foreign multinational enterprises may benefit local economies. In particular, highly productive foreign-owned firms may promote technological catch-up of local firms. Such channel of spillovers is defined as "Veblen-Geschenkron" effect of Foreign Direct Investments and is analyzed in this article. Rather than the overall density of foreign-owned plants in a region or sector, it is their productivity advantage that determines the positive effect on domestic firms in geographical and technological proximity. We test this hypothesis using new firm-level data for German and Italian manufacturing firms during the 90's. We find evidence of a significant Veblen-Gerschenkron effect which is robust to different ways of measuring total factor productivity (TFP) of firms and to different empirical specifications.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10893.

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Date of creation: Nov 2004
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Handle: RePEc:nbr:nberwo:10893

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Roberto Álvarez & Gustavo Crespi, 2007. "Multinational Firms and Productivity Catching-Up: The Case Of Chilean Manufacturing," Working Papers Central Bank of Chile 429, Central Bank of Chile. [Downloadable!]
    Other versions:
  2. Barrios, Salvador & Mas, Matilde & Navajas, Elena & Quesada, Javier, 2008. "Mapping the ICT in EU Regions: Location, Employment, Factors of Attractiveness and Economic Impact," MPRA Paper 6998, University Library of Munich, Germany. [Downloadable!]
  3. C. Dembour, 2008. "Competition for Business Location: A Survey," Journal of Industry, Competition and Trade, Springer, vol. 8(2), pages 89-111, June. [Downloadable!] (restricted)
  4. Hugo Rojas-Romagosa, 2006. "Productivity Effects of FDI Inflows: A Literature Review," CPB Memoranda 170, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  5. Zhu, Pingfang & Li, Lei & Lundin, Nannan, 2005. "S&T activities and firm performance - microeconomic evidence from manufacturing in Shanghai," BOFIT Discussion Papers 5/2005, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  6. Marcella Nicolini & Laura Resmini, 2006. "The Impact of Mnes on Domestic Firms in CEECS: A Micro-Econometric Approach," ERSA conference papers ersa06p411, European Regional Science Association. [Downloadable!]
    Other versions:
  7. Resmini, Laura & Nicolini, Marcella, 2007. "Productivity Spillovers and Multinational Enterprises: in Search of a Spatial Dimension," Papers DYNREG10, Economic and Social Research Institute (ESRI). [Downloadable!]
  8. Yuko Kinoshita & Chia-Hui Lu, 2006. "On the Role of Absorptive Capacity: FDI Matters to Growth," William Davidson Institute Working Papers Series wp845, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  9. Yama Temouri & Nigel L. Driffield & Dolores Añón Higón, 2008. "Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(1), pages 32-54, April. [Downloadable!] (restricted)
  10. Oscar Bajo-Rubio & Carmen Díaz-Mora & Carmen Díaz-Roldán, 2007. "Foreign direct investment and regional growth: An analysis of the Spanish case," Working Papers 07-08, Spanish Chapter of the International Economics and Finance Society. [Downloadable!]
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