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Product Sophistication and Spillovers from Foreign Direct Investment

In: Product Characteristics in International Economics

Author

Listed:
  • Stephan Huber

    (University of Regensburg)

Abstract

FDI in developing countries is often associated with higher economic growth due to knowledge and technology spillovers to local firms. One way that FDI speed up growth is by facilitating the manufacturing of more sophisticated products by local firms. So far, there is a lack of firm-level evidence how the presence of multinational firms affects the product sophistication of firms in a developing country. This chapter aims to fill this gap. We compile an extensive firm-product-level data set of Indian firms with information on product sophistication and spillovers from FDI in order to explore different channels through which spillovers from multinationals to local Indian firms foster the manufacturing of sophisticated products. We find that spillovers through supplier linkages strongly increase the manufacturing of sophisticated products in India.

Suggested Citation

  • Stephan Huber, 2018. "Product Sophistication and Spillovers from Foreign Direct Investment," Contributions to Economics, in: Product Characteristics in International Economics, chapter 0, pages 51-90, Springer.
    • Handle: RePEc:spr:conchp:978-3-319-76093-3_3
    DOI: 10.1007/978-3-319-76093-3_3
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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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