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Home versus Host Country Effects of FDI: Searching for New Evidence of Productivity Spillovers

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Author Info
Priit Vahter ()
Jaan Masso

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Abstract

This paper investigates the effects of both inward and outward foreign direct investment (FDI) on productivity in manufacturing and services sectors. The main novelty is the analysis of the spillover effects of outward FDI that may occur outside the investing firms on the rest of the home country. Our results based on panel data from Estonia do not indicate much spillover effects of outward or inward FDI that are robust to different specifications of the estimated model. There is substantial heterogeneity in the findings on spillovers across different specifications of the model or sector studied.

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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 820.

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Date of creation: 01 Mar 2006
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Handle: RePEc:wdi:papers:2006-820

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Related research
Keywords: foreign direct investment spillovers home country effects productivity

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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

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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.:
  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. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Blomström, Magnus & Kokko, Ari, 2003. "Human Capital and Inward FDI," CEPR Discussion Papers 3762, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Rachel Griffith & Stephen Redding & Helen Simpson, 2004. "Foreign ownership and productivity: new evidence from the service sector and the R&D lab," IFS Working Papers W04/22, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
  5. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 19(1), pages 1-31, March. [Downloadable!] (restricted)
  6. Sinani, Evis & Meyer, Klaus E., 2004. "Spillovers of technology transfer from FDI: the case of Estonia," Journal of Comparative Economics, Elsevier, vol. 32(3), pages 445-466, September. [Downloadable!] (restricted)
  7. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Christian Bellak, 2004. "How Domestic and Foreign Firms Differ and Why Does it Matter?," Journal of Economic Surveys, Blackwell Publishing, vol. 18(4), pages 483-514, 09. [Downloadable!] (restricted)
    Other versions:
  15. Urmas Varblane & Tonu Roolaht & Ele Reiljan & Rein Juriado, 2001. "Estonian Outward Foreign Direct Investments," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 9, Faculty of Economics and Business Administration, University of Tartu (Estonia). [Downloadable!]
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  17. Nigel Driffield & James H. Love, 2003. "Foreign Direct Investment, Technology Sourcing and Reverse Spillovers," Manchester School, University of Manchester, vol. 71(6), pages 659-672, December. [Downloadable!] (restricted)
  18. Arnold, Jens & Smarzynska Javorcik, Beata, 2005. "Gifted Kids or Pushy Parents? Foreign Acquisitions and Plant Performance in Indonesia," CEPR Discussion Papers 5065, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  19. Gorg, Holger & Strobl, Eric, 2001. "Multinational Companies and Productivity Spillovers: A Meta-analysis," Economic Journal, Royal Economic Society, vol. 111(475), pages F723-39, November. [Downloadable!] (restricted)
  20. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 317-341, 04. [Downloadable!] (restricted)
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  21. Helena Hannula & Katrin Tamm, 2002. "Restructuring And Efficiency In The Estonian Manufacturing Industry: The Role Of Foreign Ownership," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 15, Faculty of Economics and Business Administration, University of Tartu (Estonia), revised 2003. [Downloadable!]
  22. Damijan, Joze P. & Knell, Mark & Majcen, Boris & Rojec, Matija, 2003. "The role of FDI, R&D accumulation and trade in transferring technology to transition countries: evidence from firm panel data for eight transition countries," Economic Systems, Elsevier, vol. 27(2), pages 189-204, June. [Downloadable!] (restricted)
  23. Jürgen Bitzer & Holger Görg, 2005. "The impact of FDI on industry performance," International Trade 0505003, EconWPA. [Downloadable!]
  24. Jože P. Damijan & Mark Knell, 2005. "How Important Is Trade and Foreign Ownership in Closing the Technology Gap? Evidence from Estonia and Slovenia," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 271-295, July. [Downloadable!] (restricted)
  25. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June. [Downloadable!] (restricted)
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  26. Priit Vahter, 2005. "Which Firms Benefit More From Inward Foreign Direct Investment?," Bank of Estonia Working Papers 2005-11, Bank of Estonia, revised 10 Oct 2005. [Downloadable!]
  27. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March. [Downloadable!] (restricted)
  28. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning By Exporting Important? Micro-Dynamic Evidence From Colombia, Mexico, And Morocco," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 903-947, August. [Downloadable!] (restricted)
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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, 2006. "Productivity in Estonian enterprises: the role of innovation and competition," Bank of Estonia Working Papers 2006-07, Bank of Estonia, revised 11 Dec 2006. [Downloadable!]
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