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New and Improved: Does FDI Boost Production Complexity in Host Countries?

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  • Javorcik, Beata
  • Lo Turco, Alessia
  • Maggioni, Daniela

Abstract

This paper examines the relationship between the presence of foreign affiliates and product upgrading by Turkish manufacturing firms. The analysis suggests that Turkish firms in sectors and regions more likely to supply foreign affiliates tend to introduce more complex products, where complexity is captured using a measure developed by Hausmann and Hidalgo (2009). This finding is robust to controlling for omitted variables, sample selection and potential simultaneity bias. It is also in line with the view that inflows of foreign direct investment stimulate upgrading of indigenous production capabilities in host countries.

Suggested Citation

  • Javorcik, Beata & Lo Turco, Alessia & Maggioni, Daniela, 2017. "New and Improved: Does FDI Boost Production Complexity in Host Countries?," CEPR Discussion Papers 11942, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11942
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    References listed on IDEAS

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    Cited by:

    1. Wenxi Lu, 2018. "FDI, Service imports and Export development," School of Economics Working Papers 2018-05, University of Adelaide, School of Economics.
    2. Nicola Cortinovis & Riccardo Crescenzi & Frank van Oort, 2018. "Multinational enterprises, industrial relatedness and employment in European regions," Papers in Evolutionary Economic Geography (PEEG) 1802, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2018.

    More about this item

    Keywords

    Backward Linkages; FDI; Product Innovation; Production Upgrading; Turkey;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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