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Do Ukrainian firms benefit from FDI

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  • Lutz, Stefan H.
  • Talavera, Oleksandr

Abstract

All countries are eager to attract as much foreign investments as possible. At the same time FDI may have not only positive, but also negative economic effects for receiving countries. Positive effects are associated with technology transfer, efficient allocation of resources, and training of domestic workers. However, the entry of foreign firms could, e.g., lead to a decrease of labor productivity at domestic firms, which is a negative effect. The main purpose of this paper is to estimate direct and indirect effects of FDI. First, we test for direct influence of foreign direct investments on firms’ performance, where the latter is estimated alternatively as labor productivity and as exports. FDI notably increases both labor productivity and export volumes. Second, we look for spillover or indirect effects. There is statistical evidence that the levels of FDI in certain regional industries are associated with higher performance indicators of firms’ not receiving FDI in those same regional industries. --

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Bibliographic Info

Paper provided by ZEI - Center for European Integration Studies, University of Bonn in its series ZEI Working Papers with number B 04-2003.

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Date of creation: 2003
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Handle: RePEc:zbw:zeiwps:b042003

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Keywords: Foreign direct investment; firm performance; spillovers; Ukraine;

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References

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  1. Beata K. Smarzynska, 2003. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages," William Davidson Institute Working Papers Series 548, William Davidson Institute at the University of Michigan.
  2. Lutz, Stefan H. & Talavera, Oleksandr & Park, Sang-Min, 2003. "The effects of regional and industry-wide FDI spillovers on export of Ukrainian firms," ZEI Working Papers B 18-2003, ZEI - Center for European Integration Studies, University of Bonn.
  3. Hans-Werner Sinn & Alfons J. Weichenrieder, 1997. "Foreign direct investment, political resentment and the privatization process in eastern Europe," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 12(24), pages 177-210, 04.
  4. Blomstrom, Magnus & Sjoholm, Fredrik, 1999. "Technology transfer and spillovers: Does local participation with multinationals matter?1," European Economic Review, Elsevier, Elsevier, vol. 43(4-6), pages 915-923, April.
  5. Stefan Lutz & Oleksandr Talavera, 2004. "Do Ukrainian Firms Benefit from FDI?," Economic Change and Restructuring, Springer, Springer, vol. 37(2), pages 77-98, 06.
  6. Salvador Barrios & Sophia Dimelis & Helen Louri & Eric Strobl, . "Efficiency Spillovers from Foreign Direct Investment in the EU Periphery: A comparative study of Greece, Ireland and Spain," Working Papers 2002-02, FEDEA.
  7. Randall K. Filer & Jan Hanousek, 2002. "Data Watch: Research Data from Transition Economies," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(1), pages 225-240, Winter.
  8. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," Working Papers, Queen Mary, University of London, School of Economics and Finance 452, Queen Mary, University of London, School of Economics and Finance.
  9. M. Ishaq, 1997. "Foreign Direct Investment in Ukraine Since Independence," CERT Discussion Papers, Centre for Economic Reform and Transformation, Heriot Watt University 9716, Centre for Economic Reform and Transformation, Heriot Watt University.
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  11. Susan E Feinberg & Sumit K Majumdar, 2001. "Technology Spillovers from Foreign Direct Investment in the Indian Pharmaceutical Industry," Journal of International Business Studies, Palgrave Macmillan, vol. 32(3), pages 421-437, September.
  12. Salvador Barrios & Sophia Dimelis & Helen Louri & Eric Strobl, 2004. "Efficiency spillovers from foreign direct investment in the EU periphery: A comparative study of Greece, Ireland, and Spain," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 140(4), pages 688-705, December.
  13. Blomstrom, Magnus & Globerman, Steven & Kokko, Ari, 1999. "The determinants of host country spillovers from foreign direct investment: review and synthesis of the literature," Working Paper Series in Economics and Finance 502, Stockholm School of Economics.
  14. Jan Svejnar, 2002. "Transition Economies: Performance and Challenges," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(1), pages 3-28, Winter.
  15. Davies, Howard, 1977. "Technology Transfer through Commercial Transactions," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 26(2), pages 161-75, December.
  16. Jozef Konings, 2000. "The Effects of Foreign Direct Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies," William Davidson Institute Working Papers Series 344, William Davidson Institute at the University of Michigan.
  17. Manuela Angelucci & Saul Estrin & Jozef Konings & Zbigniew Zolkiewski, 2002. "The Effect of Ownership and Competitive Pressure on Firm Performance in Transition Countries: Micro Evidence from Bulgaria, Romania and Poland," William Davidson Institute Working Papers Series 434, William Davidson Institute at the University of Michigan.
  18. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, American Economic Association, vol. 89(3), pages 605-618, June.
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Citations

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Cited by:
  1. Stefan Lutz & Oleksandr Talavera & Sang-Min Park, 2008. "Effects of Foreign Presence in a Transition Economy: Regional and Industrywide Investments and Firm-Level Exports in Ukrainian Manufacturing," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 44(5), pages 82-98, September.
  2. Lutz, Stefan H. & Talavera, Oleksandr, 2003. "Do Ukrainian firms benefit from FDI," ZEI Working Papers B 04-2003, ZEI - Center for European Integration Studies, University of Bonn.
  3. Mebratie, Anagaw Derseh & Bedi, Arjun S., 2011. "Foreign Direct Investment, Black Economic Empowerment and Labour Productivity in South Africa," IZA Discussion Papers 6048, Institute for the Study of Labor (IZA).
  4. Pradhan, Jaya Prakash, 2007. "How Do Indian Multinationals Affect Exports from Home Country?," MPRA Paper 19022, University Library of Munich, Germany.
  5. Alyson Ma, 2006. "Export Spillovers to Chinese Firms: Evidence from Provincial Data," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 4(2), pages 127-149.
  6. Galina Hale & Cheryl Long, 2006. "What Determines Technological Spillovers of Foreign Direct Investment: Evidence from China," Working Papers, Economic Growth Center, Yale University 934, Economic Growth Center, Yale University.
  7. Pradhan, Jaya Prakash & Das, Keshab & Paul, Mahua, 2006. "Export-orientation of Foreign Manufacturing Affiliates in India: Factors, Tendencies and Implications," MPRA Paper 12338, University Library of Munich, Germany.
  8. Galina Hale & Cheryl Long, 2006. "FDI spillovers and firm ownership in China: labor markets and backward linkages," Working Paper Series, Federal Reserve Bank of San Francisco 2006-25, Federal Reserve Bank of San Francisco.
  9. Mebratie, A.D. & van Bergeijk, P.A.G., 2011. "Firm Heterogeneity and Development: A Meta Analysis of FDI Productivity Spill-overs," ISS Working Papers - General Series, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague 525, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  10. Galina Hale & Cheryl Long, 2011. "Are There Productivity Spillovers From Foreign Direct Investment In China?," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 16(2), pages 135-153, 05.

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