FDI Spillovers and their Interrelationships with Trade
AbstractForeign direct investment (FDI) represents an increasingly important dimension of international economic integration with global FDI flows growing faster than output over the past two decades. FDI is a particular form of investment, as it transfers knowledge as well as finance that may otherwise be unavailable in the domestic economy. This paper uses firm-level data to identify FDI spillovers across countries, sectors and time. The analysis suggests that knowledge-related spillovers from FDI vary considerably across sectors. Services industries enjoy the strongest productivity-enhancing effects of FDI, particularly through backward linkages. There is no strong evidence of horizontal productivity spillovers at the aggregate level. The results also indicate a significant and positive correlation between the degree of trade openness and output when measuring the impact of foreign presence in the domestic economy. A positive interaction is found between trade liberalisation and productivity spillovers. Thus, trade liberalisation can be seen as an important component of any reform package designed to help countries maximise the benefits of FDI.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by OECD Publishing in its series OECD Trade Policy Papers with number 80.
Date of creation: 07 Oct 2008
Date of revision:
trade openness; investment; micro data; trade liberalisation; technology; spillovers; backward linkage; IAS 19; services; FDI; forward linkage;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-21 (All new papers)
- NEP-EFF-2008-10-21 (Efficiency & Productivity)
- NEP-INT-2008-10-21 (International Trade)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Pavla NIKOLOVOVÁ, 2013. "Sourcing Patterns of FDI Activity and Their Impact on the Domestic Economy," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(3), pages 288-302, July.
- 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.
- Damijan, Jože P. & Rojec, Matija & Majcen, Boris & Knell, Mark, 2013. "Impact of firm heterogeneity on direct and spillover effects of FDI: Micro-evidence from ten transition countries," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 895-922.
- Tomas Havranek & Zuzana Irsova, 2011.
"How to Stir Up FDI Spillovers: Evidence from a Large Meta-Analysis,"
William Davidson Institute Working Papers Series
wp1021, William Davidson Institute at the University of Michigan.
- Tomáš Havránek & Zuzana Iršová, 2011. "How to Stir Up FDI Spillovers: Evidence from a Large Meta-Analysis," Working Papers IES 2011/34, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2011.
- Tomas Havranek & Zuzana Irsova, 2012. "Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(10), pages 1375-1396, October.
If references are entirely missing, you can add them using this form.