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

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  • 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
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    References listed on IDEAS

    as
    1. Blomstrom, Magnus & Wolff, E.N., 1989. "Multinational Corporations And Productivity Convergence In Mexico," Working Papers 89-28, C.V. Starr Center for Applied Economics, New York University.
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    3. Blomstrom, Magnus, 1986. "Foreign Investment and Productive Efficiency: The Case of Mexico," Journal of Industrial Economics, Wiley Blackwell, vol. 35(1), pages 97-110, September.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Morocco; foreign investment; technology transfer; trade reform;
    All these keywords.

    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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