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Foreign Direct Investment and Productivity Spillovers in Swedish Manufacturing

Author

Listed:
  • Karpaty, Patrik

    () (Örebro University)

  • Lundberg, Lars

    () (Trade Union Institute for Economic Research)

Abstract

Based on a panel of data for Swedish manufacturing firms in 1990-2000, this paper finds strong evidence for the existence of positive spillover effects from inward FDI. The presence of foreign ownership in the same industry and region seems to enhance the total factor productivity of domestic firms. Moreover, the size of these FDI spillover effects seems to depend both on the nationality of the foreign MNF as well as on the absorptive capacity of the domestic firm, measured by its own R&D. It appears that this positive relationship between foreign presence and productivity cannot be explained as a consequence of reverse causality, i.e that FDI is attracted to highly productive regions and industries.

Suggested Citation

  • Karpaty, Patrik & Lundberg, Lars, 2004. "Foreign Direct Investment and Productivity Spillovers in Swedish Manufacturing," Working Paper Series 194, Trade Union Institute for Economic Research.
  • Handle: RePEc:hhs:fiefwp:0194
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    References listed on IDEAS

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    1. Blomstrom, Magnus & Sjoholm, Fredrik, 1999. "Technology transfer and spillovers: Does local participation with multinationals matter?1," European Economic Review, Elsevier, vol. 43(4-6), pages 915-923, April.
    2. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February.
    3. Davide Castellani & Antonello Zanfei, 2007. "Multinational companies and productivity spillovers: is there a specification error?," Applied Economics Letters, Taylor & Francis Journals, vol. 14(14), pages 1047-1051.
    4. Ronald Findlay, 1978. "Relative Backwardness, Direct Foreign Investment, and the Transfer of Technology: A Simple Dynamic Model," The Quarterly Journal of Economics, Oxford University Press, vol. 92(1), pages 1-16.
    5. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    6. Frank Barry & Holger Gorg & Eric Strobl, 2005. "Foreign direct investment and wages in domestic firms in Ireland: Productivity spillovers versus labour-market crowding out," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 67-84.
    7. Salvador Barrios & Eric Strobl, 2002. "Foreign direct investment and productivity spillovers: Evidence from the Spanish experience," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(3), pages 459-481, September.
    8. Blomstrom, Magnus & Persson, Hakan, 1983. "Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the Mexican manufacturing industry," World Development, Elsevier, vol. 11(6), pages 493-501, June.
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    More about this item

    Keywords

    Multinational firms; Productivity spillovers; Foreign direct investment;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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