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The Nested Variable Model of FDI Spillover Effects: Estimation Using Hungarian Panel Data

  • Ichiro Iwasaki
  • Péter Csizmadia
  • Miklós Illéssy
  • Csaba Makó
  • Miklós Szanyi

A new empirical model is presented that considers the productivity spillover effects of foreign direct investment (FDI) by focusing on the multi-layered structure of industrial classifications. In this model, the market presence of horizontal FDI in a host country is expressed using multiple spillover variables with a nested structure corresponding to the aggregated level of industrial classification. Using large-scale firm-level data from Hungary, we estimated the nested variable model and verified horizontal FDI spillover effects that cannot be captured with the conventional model having a single horizontal variable.

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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 26 (2012)
Issue (Month): 4 (October)
Pages: 673-709

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Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:673-709
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