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Foreign Direct Investment And Productivity Spillovers In The Irish Manufacturing Industry: Evidence From Firm Level Panel Data

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  • Frances Ruane
  • Ali Ugur

Abstract

This paper examines possible productivity spillovers from foreign-owned firms to indigenous firms in the manufacturing sector in Ireland, using a firm-level panel of all firms in the Irish manufacturing sector over the period 1991-1998. The approach commonly applied in the literature to examine such spillovers is to establish whether the presence of foreign firms in a sector boosts the productivity of indigenous plants in that sector. The measure of foreign presence used is the share of total employment in a sector accounted for by foreign firms in that sector. Using this approach, our results do not find any significant spillovers from foreign to domestic firms in Irish manufacturing industry. This result is independent of whether the relationship is estimated in levels or rates of change, and whether high or low levels of sectoral aggregation are used in measuring foreign presence. Following Castellani and Zanfei (2002), who show that the measurement of foreign presence as a share causes a downward bias in estimation results, we re-estimate the relationship using the absolute level of employment accounted for by foreign firms as our foreign presence variable. Applying this approach, we find some evidence of a positive and significant relationship between the level of labour productivity in domestic firms and foreign presence in the relevant Irish manufacturing sector. These results are sensitive to the levels of sectoral aggregation specified.

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Bibliographic Info

Paper provided by Trinity College Dublin, Department of Economics in its series Trinity Economics Papers with number 20026.

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Date of creation: 2002
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Handle: RePEc:tcd:tcduee:20026

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  1. Hubert, Florence & Pain, Nigel, 2001. "Inward Investment and Technical Progress in the United Kingdom Manufacturing Sector," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 134-47, May.
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Cited by:
  1. Cuyvers L. & Plasmans J. & Soeng R. & Van den Bulcke D., 2008. "Productivity Spillovers from Foreign Direct Investment in the Cambodian Manufacturing Sector: Evidence from Establishment-Level Data," Working Papers 2008004, University of Antwerp, Faculty of Applied Economics.
  2. Girma, Sourafel & Görg, Holger & Strobl, Eric & Walsh, Frank, 2008. "Creating jobs through public subsidies: An empirical analysis," Labour Economics, Elsevier, vol. 15(6), pages 1179-1199, December.
  3. Sourafel Girma & Holger Görg & Aoife Hanley, . "R&D and exporting: A comparison of British and Irish firms," Discussion Papers 07/18, University of Nottingham, GEP.
  4. Salvador Barrios & Holger Görg & Eric Strobl, 2004. "Foreign Direct Investment, Competition and Industrial Development in the Host Country: An Analysis for the Case of "White" Certificates," Discussion Papers of DIW Berlin 426, DIW Berlin, German Institute for Economic Research.
  5. Frances Ruane & Ali Ugur, 2005. "Export Platform FDI and Dualistic Development," The Institute for International Integration Studies Discussion Paper Series iiisdp029, IIIS.
  6. BARRIOS, Salvador & GOERG, Holger & STROBL, Eric, 2004. "Foreign direct investment, competition and industrial development in the host country," CORE Discussion Papers 2004011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Görg, Holger & Greenaway, David, 2002. "Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Investment?," CEPR Discussion Papers 3485, C.E.P.R. Discussion Papers.
  8. Frank Barry & Holger Gorg & Eric Strobl, 2005. "Foreign direct investment and wages in domestic firms in Ireland: Productivity spillovers versus labour-market crowding out," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 67-84.
  9. Barry, Frank & Görg, Holger & Strobl, Eric, 2001. "Foreign Direct Investment, Agglomerations and Demonstration Effects: An Empirical Investigation," CEPR Discussion Papers 2907, C.E.P.R. Discussion Papers.
  10. Pradeep Kumar Keshari, 2011. "Efficiency Spillovers from FDI in the Indian Machinery Industry: A Firm Level Study Using Panel Data Models," Working Papers id:4195, eSocialSciences.
  11. Manoj Pant & Sangeeta Mondal, . "FDI, Technology Transfer and Spillover —A Case Study of India," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 10-04, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
  12. Görg, Holger & Greenaway, David, 2003. "Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," IZA Discussion Papers 944, Institute for the Study of Labor (IZA).
  13. Schiffbauer, Marc & Siedschlag, Iulia & Ruane, Frances, 2009. "Do Foreign Mergers & Acquisitions Boost Firm Productivity?," Papers DYNREG47, Economic and Social Research Institute (ESRI).

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