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Multinationals, Technology Upgrading, and Wages in Urban and Rural Indonesia

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  • Sadayuki Takii

Abstract

The author examines whether foreign direct investment has an effect on regional disparities in a developing country. For this purpose, the author compares the magnitude of productivity and wage spillovers derived from foreign presence to local firms in different locations. Using plant‐level panel data for Indonesian manufacturing in 1990–95, the study finds supporting evidence for the hypothesis that the effects of foreign presence on the level and growth of productivity and wages in locally owned plants are greater in regions where multinational corporation affiliates tend to have a higher concentration as compared to other regions in the same province. The findings indicate that spillovers occur locally and diffuse to neighboring regions in part, and thus that the concentration of foreign direct investment in a certain region imparts a greater positive externality on one hand, and negatively affects regional disparities on the other.

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  • Sadayuki Takii, 2009. "Multinationals, Technology Upgrading, and Wages in Urban and Rural Indonesia," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 151-163, February.
    • Handle: RePEc:bla:rdevec:v:13:y:2009:i:1:p:151-163
    DOI: 10.1111/j.1467-9361.2008.00467.x
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    References listed on IDEAS

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    2. Elisa Giuliani & Chiara Macchi, 2014. "Multinational corporations’ economic and human rights impacts on developing countries: a review and research agenda," Cambridge Journal of Economics, Oxford University Press, vol. 38(2), pages 479-517.
    3. Geoffrey G. Gachino, 2011. "Determinants of FDI Spillover in the Kenyan Manufacturing Industry: Firm-Level Evidence," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 10(3), pages 235-255, December.

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