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Technology Transfer through FDI in Top-10 Transition Countries: How Important are Direct Effects, Horizontal and Vertical Spillovers?

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Author Info
Joze P. Damijan ()
Mark Knell ()
Boris Majcen ()
Matija Rojec ()

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Abstract

The paper exploits a large set of more than 8,000 firms for ten advanced transition countries in order to uncover the importance of different channels of technology transfer through FDI and its impact on productivity growth of local firms. In addition to direct effects, we also distinguish between intra-industry (horizontal) and inter-industry (vertical) spillovers from foreign owned firms to local firms. After correcting for foreign investment selection bias and controlling for endogeneity of input demand (using a dynamic system GMM approach), direct FDI effects were found to provide by far the most important productivity effect for local firms in transition countries. Direct effects of FDI are found to provide on average an impact on firm’s productivity that is larger by factor 50 than the impact of backward linkages and by factor 500 larger than the impact of horizontal spillovers.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 549.

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Length: 31 pages
Date of creation: 01 Feb 2003
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Handle: RePEc:wdi:papers:2003-549

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Keywords: Foreign direct investments technology transfer spillovers transition economies

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade

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This item is featured on the following reading lists:
  1. Technology Assessment
References listed on IDEAS
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.:
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Full references

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. Priit Vahter, 2004. "The Effect Of Foreign Direct Investment On Labour Productivity: Evidence From Estonia And Slovenia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 32, Faculty of Economics and Business Administration, University of Tartu (Estonia). [Downloadable!]
  2. Andreja Jaklic & Joze P. Damijan & Matija Rojec, 2008. "Innovation Cooperation and Innovation Activity of Slovenian Enterprises," LICOS Discussion Papers 20108, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  3. Damijan, Jože P. & Kostevc, Crt, 2007. "Knowledge Transfer, Innovation and Growth," Papers DYNREG06, Economic and Social Research Institute (ESRI). [Downloadable!]
  4. Balázs, Muraközy & Halpern, László, 2005. "Does Distance Matter in Spillover?," CEPR Discussion Papers 4857, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Klara Sabirianova Peter & Jan Svejnar & Katherine Terrell, 2004. "Distance to the Efficiency Frontier and FDI Spillovers," William Davidson Institute Working Papers Series 2004-721, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  6. Nuno Crespo & Isabel Proença & Maria Paula Fontoura, 2007. "FDI Spillovers at Regional Level: Evidence from Portugal," Working Papers 2007/28, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
  7. Priit Vahter, 2005. "The Effect of Foreign Direct Investment on Labour Productivity: An Overview of an Empirical Study of Estonia and Slovenia," Working Papers 123, School of Economics and Business Administration, Tallinn University of Technology. [Downloadable!]
  8. Sandrine Levasseur, 2006. "Convergence and FDI in an enlarged EU: what can we learn from the experience of cohesion countries for the CEECS?," Documents de Travail de l'OFCE 2006-12, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  9. Erol Taymaz & Aykut Lenger, 2004. "Multinational corporations as a vehicle for productivity spillovers in Turkey," DRUID Working Papers 04-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  10. Nuno Crespo & Maria Paula Fontoura, 2005. "Determinant Factors of FDI Spillovers – What Do We Really Know?," Working Papers 2005/06, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
    Other versions:
  11. Katja Zajc Kejžar, 2006. "The Role Of Foreign Direct Investment In The Firm Selection Process In A Host Country: Evidence From Slovenia," William Davidson Institute Working Papers Series wp841, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  12. Joze P. Damijan & Saso Polanec & Janez Prasnikar, 2004. "Self-selection, Export Market Heterogeneity and Productivity Improvements: Firm Level Evidence from Slovenia," LICOS Discussion Papers 14804, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  13. Jože P. Damijan & Crt Kostevc, 2008. "Trade liberalization and economic geography in transition countries: Can FDI explain the adjustment patterns of regional wages?," LICOS Discussion Papers 22208, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  14. Adam Gersl & Ieva Rubene & Tina Zumer, 2007. "Foreign Direct Investment and Productivity Spillovers: Updated Evidence from Central and Eastern Europe," Working Papers 2007/8, Czech National Bank, Research Department. [Downloadable!]
  15. Guest Editors: Ana Teresa Tavares & Stephen Young, 2005. "FDI and multinationals: patterns, impacts and policies," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 12(1), pages 3-16, February. [Downloadable!] (restricted)
  16. Anna Iara, 2005. "Regional growth in Hungary - The impact of European economic integration," ERSA conference papers ersa05p342, European Regional Science Association. [Downloadable!]
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