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Effects of Foreign Presence in a Transition Economy: Regional and Industry-Wide Investments and Firm-Level Exports in Ukrainian Manufacturing

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  • Stefan Lutz
  • Oleksandr Talavera
  • Sang-Min Park

Abstract

We investigate the effects of regional and industry-wide foreign presence and foreign direct investment (FDI) on export volumes of Ukrainian manufacturing firms using unpublished panel data from 1996-2000. Foreign presence through FDI may have negative competition effects on domestic firms' performance while, at the same time, domestic firms' productivity may be increased by technology transfer or through training and demonstration effects. From a Cournot competition model including negative competition and positive technology-spillover effects, we derive the hypotheses that foreign presence and foreign investment might positively affect domestic firms' output and exports. Our estimation results support these hypotheses and suggest in particular that large firms and durable-goods producers benefit most from foreign presence and investments.

Suggested Citation

  • Stefan Lutz & Oleksandr Talavera & Sang-Min Park, 2006. "Effects of Foreign Presence in a Transition Economy: Regional and Industry-Wide Investments and Firm-Level Exports in Ukrainian Manufacturing," Discussion Papers of DIW Berlin 594, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp594
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    Cited by:

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    2. Maryia Akulava & Ganna Vakhitova, 2010. "The Impact of FDI on Firm’s Performance Across Sectors: Evidence from Ukraine," BEROC Working Paper Series 10, Belarusian Economic Research and Outreach Center (BEROC).
    3. Iwasaki, Ichiro & Csizmadia, Péter & Illéssy, Miklós & Makó, Csaba & Miklós Szanyi, 2010. "Foreign Direct Investment, Information Spillover, and Export Decision : The Concentric-Circle Model with Application to Hungarian Firm-Level Data," Discussion Paper Series a527, Institute of Economic Research, Hitotsubashi University.
    4. Van Ha & Mark J. Holmes & Gazi Hassan, 2020. "Does foreign investment benefit the exporting activities of Vietnamese firms?," The World Economy, Wiley Blackwell, vol. 43(6), pages 1619-1646, June.
    5. Liza Rybina & James Reardon & Janet Humphrey, 2010. "Patriotism, Cosmopolitanism, Consumer Ethnocentrism and Purchase Behavior in Kazakhstan," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 1(2).

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    More about this item

    Keywords

    transition; foreign direct investment; spillovers; firm performance.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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