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Foreign direct investment, spillovers and absorptive capacity: evidence from quantile regressions

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  • Girma, Sourafel
  • Görg, Holger

Abstract

This paper focuses on the role of absorptive capacity in determining whether or not domestic firms benefit from productivity spillovers from FDI using establishment level data for the UK. We allow for different effects of FDI on establishments located at different quantiles of the productivity distribution by using conditional quantile regression. Overall, while there is some heterogeneity in results across sectors and quantiles, our findings clearly suggest that absorptive capacity matters for productivity spillover benefits. We find evidence for a u-shaped relationship between productivity growth and FDI interacted with absorptive capacity. We also analyse in some detail the impact of changes in absorptive capacity on establishments' ability to benefit from spillovers. --

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2005,13.

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Date of creation: 2005
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Handle: RePEc:zbw:bubdp1:3372

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Keywords: foreign direct investment; absorptive capacity; productivity spillovers; quantile regressions;

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Citations

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Cited by:
  1. Nuno Crespo & Isabel Proença & Maria Paula Fontoura, 2008. "FDI Spillovers at Regional Level: Evidence from Portugal," Working Papers Series 1, ISCTE-IUL, Business Research Unit (BRU-IUL) ercwp0508, ISCTE-IUL, Business Research Unit (BRU-IUL).
  2. Svetlana Batrakova & Ronald Davies, 2010. "Is there an environmental benefit to being an exporter? Evidence from firm level data," The Institute for International Integration Studies Discussion Paper Series, IIIS iiisdp322, IIIS, revised Mar 2010.
  3. 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).
  4. Anna Maria Falzoni & Mara Grasseni, 2005. "Home Country Effects of Investing Abroad: Evidence from Quantile Regressions," KITeS Working Papers, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy 170, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jun 2005.
  5. Richard Harris, 2009. "Spillover and backward linkage effects of FDI: empirical evidence for the UK," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 33206, London School of Economics and Political Science, LSE Library.
  6. Gábor Békés & Jörn Kleinert & Farid Toubal, 2009. "Spillovers from Multinationals to Heterogeneous Domestic Firms: Evidence from Hungary," Working Papers 2009-31, CEPII research center.
  7. B. Merlevede & K. Schoors, 2006. "FDI and the Consequences Towards more complete capture of spillover effects," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium, Ghent University, Faculty of Economics and Business Administration 06/372, Ghent University, Faculty of Economics and Business Administration.
  8. Görg, Holger & Greenaway, David, 2002. "Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Investment?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3485, C.E.P.R. Discussion Papers.
  9. László Halpern & Balázs Muraközy, 2007. "Does distance matter in spillover?," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 15, pages 781-805, October.
  10. Della Temenggung, 2007. "Productivity Spillovers from Foreign Direct Investment: Indonesian Manufacturing Industry’s Experience 1975-2000," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c012_048, DEGIT, Dynamics, Economic Growth, and International Trade.

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