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Productivity Spillovers From Multinational Corporations: Vulnerability To Deficient Estimation

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Author Info
Isabel Proenca (ISEG-UTL)
Maria Paula Fontoura (ISEG-UTL)
Nuno Crespo (ISEG-UTL)

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Abstract

Evidence on productivity spillovers from FDI to domestic firms is ambiguous. Incorrect estimation procedures may be one of the sources for the contradictory results obtained in empirical studies on this subject. We observe that inadequacy of the estimation procedures leads to a severe underestimation of the spillover effect. In discussing the appropriated econometric methodology, inconsistency due to simultaneity of FDI and other explanatory variables and endogeneity related to firm unobserved heterogeneity are specially addressed. Additionally, incorrect inference and the possible lack of precision in estimation due to the availability of few periods in the panel are also analysed.

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Publisher Info
Paper provided by EconWPA in its series International Trade with number 0508004.

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Length: 11 pages
Date of creation: 05 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpit:0508004

Note: Type of Document - pdf; prepared on windows; pages: 11
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Web page: http://129.3.20.41

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Related research
Keywords: domestic firm productivity; multinational corporations; technological spillovers; panel data; Extended GMM.;

Find related papers by JEL classification:
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. Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April. [Downloadable!] (restricted)
  2. Richard Harris & Catherine Robinson, 2003. "Foreign Ownership and Productivity in the United Kingdom Estimates for U.K. Manufacturing Using the ARD," Review of Industrial Organization, Springer, vol. 22(3), pages 207-223, May. [Downloadable!] (restricted)
  3. K. Schoors & B. Van Der Tol, 2002. "Foreign direct investment spillovers within and between sectors: Evidence from Hungarian data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/157, Ghent University, Faculty of Economics and Business Administration. [Downloadable!]
  4. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February. [Downloadable!] (restricted)
  5. Brian J. Aitken & Ann E. Harrison, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June. [Downloadable!] (restricted)
  6. 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)
  7. Flôres Junior, Renato Galvão & Fontoura, Maria Paula & Santos, Rogério Guerra, 2002. "Foreign Direct Investment Spillovers: Additional Lessons From a Country Study," Economics Working Papers (Ensaios Economicos da EPGE) 455, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  8. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor and Francis Journals, vol. 19(3), pages 321-340. [Downloadable!] (restricted)
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  9. 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). [Downloadable!]
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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. 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!]
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