The Effect of Foreign Direct Investment on Labour Productivity: An Overview of an Empirical Study of Estonia and Slovenia
AbstractThis paper studies the effects of foreign direct investment on labour productivity in manufacturing industries of two transition countries, Estonia and Slovenia. The emphasis is on the dimension of export/local market orientation. The study is based on firm-level panel data. It is shown that in Estonia the export oriented foreign investment enterprises have on average much lower labour productivity than the domestic market oriented foreign affiliates. In Slovenia, on the contrary, the export orientation of foreign affiliates is not correlated with lower labour productivity. No horizontal spillover of foreign direct investment to domestic firms is detected in Estonia. In Slovenia, however, positive spillovers to domestic firms are found. The findings show also that different types of foreign direct investment can have different effects on the host country and that the existence of positive spillover may depend on the level of economic development of the host country.
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Bibliographic InfoPaper provided by Tallinn School of Economics and Business Administration, Tallinn University of Technology in its series Working Papers with number 123.
Date of creation: 2005
Date of revision:
Publication status: Published in Working Papers in Economics, School of Economics and Business Administration,Tallinn University of Technology (TUTWPE), Volume 14, Pages 67-84
foreign direct investment; productivity; spillovers; export oriented foreign direct investments;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-25 (All new papers)
- NEP-EFF-2006-03-25 (Efficiency & Productivity)
- NEP-INT-2006-03-25 (International Trade)
- NEP-TRA-2006-03-25 (Transition Economics)
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