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Are there dynamic externalities from direct foreign investment? Evidence for Morocco

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Listed:
  • Harrison, Ann
  • Haddad, Mona

Abstract

Many developing countris now actively solicit foreign investment, offering income tax holidays, import duty exemptions, and subsidies to foreign firms. One reason for subsidizing these firms is the positive externalities as foreign technology is transferred from foreign to domestic firms. This paper employs a unique firm-level dataset to test for such dynamic externalities in the Moroccan manufacturing sector. We find no evidence of positive externalities, although the dispersion of productivity is smaller in sectors with more foreign firms. Using detailed information on quotas and tariffs, we also reject the hypothesis that the lack of such dynamic externalities occurs because foreign investors are attracted to protected domestic sectors.

Suggested Citation

  • Harrison, Ann & Haddad, Mona, 1993. "Are there dynamic externalities from direct foreign investment? Evidence for Morocco," MPRA Paper 36279, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:36279
    as

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    References listed on IDEAS

    as
    1. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Multinational Corporations and Productivity Convergence in Mexico," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 9, pages 134-159, Palgrave Macmillan.
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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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