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Foreign Direct Investment, Information Spillover, and Export Decision : The Concentric-Circle Model with Application to Hungarian Firm-Level Data

Listed author(s):
  • Iwasaki, Ichiro
  • Csizmadia, Péter
  • Illéssy, Miklós
  • Makó, Csaba
  • Miklós Szanyi

In this paper, we empirically examine the impact of foreign direct investment (FDI) on the export decision of domestic firms using large-scale panel data from Hungary. In comparison with the conventional model that expresses the export propensity of multinational enterprises (MNEs) with a single variable, the concentric-circle model, considering the nested structure of industrial classification, more precisely specifies the source, extent, and direction of information spillovers from MNEs to indigenous firms. We also confirmed the close relationship between the information spillover effect and the heterogeneity of FDI and domestic firms.

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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number a527.

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Date of creation: Mar 2010
Handle: RePEc:hit:hituec:a527
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  1. Aitken, Brian & Hanson, Gordon H. & Harrison, Ann E., 1997. "Spillovers, foreign investment, and export behavior," Journal of International Economics, Elsevier, vol. 43(1-2), pages 103-132, August.
  2. Wagner, Joachim, 2002. "The causal effects of exports on firm size and labor productivity: first evidence from a matching approach," Economics Letters, Elsevier, vol. 77(2), pages 287-292, October.
  3. Richard Baldwin, 1989. "Sunk-Cost Hysteresis," NBER Working Papers 2911, National Bureau of Economic Research, Inc.
  4. Stefan Lutz & Oleksandr Talavera & Sang-Min Park, 2008. "Effects of Foreign Presence in a Transition Economy: Regional and Industrywide Investments and Firm-Level Exports in Ukrainian Manufacturing," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 44(5), pages 82-98, September.
  5. Richard Kneller & Mauro Pisu, 2007. "Industrial Linkages and Export Spillovers from FDI," The World Economy, Wiley Blackwell, vol. 30(1), pages 105-134, 01.
  6. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
  7. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning by Exporting Important? Micro-Dynamic Evidence from Colombia, Mexico, and Morocco," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 903-947.
  8. Javorcik, Beata Smarzynska & Spatareanu, Mariana, 2008. "To share or not to share: Does local participation matter for spillovers from foreign direct investment?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 194-217, February.
  9. Deborah L. Swenson, 2008. "Multinationals and the creation of Chinese trade linkages," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 596-618, May.
  10. Sourafel Girma & David Greenaway & Richard Kneller, 2004. "Does Exporting Increase Productivity? A Microeconometric Analysis of Matched Firms," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 855-866, November.
  11. Frances Ruane & Julie Sutherland, 2005. "Foreign Direct Investment and Export Spillovers: How Do Export Platforms Fare?," The Institute for International Integration Studies Discussion Paper Series iiisdp058, IIIS.
  12. Blanes-Cristóbal, José Vicente & Dovis, Marion & Milgram-Baleix, Juliette & Moro-Egido, Ana I., 2008. "Do sunk exporting costs differ among markets? Evidence from Spanish manufacturing firms," Economics Letters, Elsevier, vol. 101(2), pages 110-112, November.
  13. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2007. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," Econometrica, Econometric Society, vol. 75(3), pages 837-873, 05.
  14. Ichiro Iwasaki & Péter Csizmadia & Miklós Illéssy & Csaba Makó & Miklós Szanyi, 2012. "The Nested Variable Model of FDI Spillover Effects: Estimation Using Hungarian Panel Data," International Economic Journal, Taylor & Francis Journals, vol. 26(4), pages 673-709, October.
  15. Fukunari Kimura & Kozo Kiyota, 2006. "Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(4), pages 695-719, December.
  16. Yasar, Mahmut & Rejesus, Roderick M., 2005. "Exporting status and firm performance: Evidence from a matched sample," Economics Letters, Elsevier, vol. 88(3), pages 397-402, September.
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