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Inflation-Unemployment Trade-off: Some Evidence for the USA


  • Renato G. Flôres Jr.
  • Maria Paula Fontoura
  • Rogério Guerra Santos


This paper investigates the impact of foreign direct investment on the productivity performance of domestic firms in Portugal. The data comprise nine manufacturing sectors for the period 1992-95. Relatively to previous studies, model specification is improved by taking into consideration several aspects: the influence of the "technological gap" on spill-overs diffusion and the choice of its most appropriate interval; sectoral variation in the coefficients of the spill-overs effect; identification of constant, idiosyncratic sectoral factors by means of a fixed effects model; and the search for inter-sectoral positive spillover effects. The relationship between domestic firms productivity and the foreign presence does take place in a positive way, only if a proper technology differential between the foreign and domestic producers exists and the sectoral characteristics are favourable. In broad terms, spillovers diffusion is associated to modem industries in which the foreign owned establishments have a clear, but not too sharp, edge on the domestic ones. Besides, other specific sectoral influences can be pertinent; agglomerative location factors being one example.

Suggested Citation

  • Renato G. Flôres Jr. & Maria Paula Fontoura & Rogério Guerra Santos, 2000. "Inflation-Unemployment Trade-off: Some Evidence for the USA," Working Papers Department of Economics 2000/04, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp42000

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    More about this item


    Domestic firm productivity; foreign direct investment; Portugal; technological spillovers.;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe


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