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Distance, Time since Foreign Entry, and Knowledge Spillovers from Foreign Direct Investment

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  • Bruno Merlevede
  • Victoria Purice

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Abstract

This paper investigates the effect of foreign direct investment on the productivity of local firms. We decompose traditional country-wide spillover measures in different components according to both distance between foreign and domestic firms and timesince- foreign-entry. We find larger and faster spillover effects for local suppliers of foreign firms at shorter distance, driven mainly by recent foreign entrants. Irrespective of distance, foreign firms of medium maturity generate backward spillover effects that fade away with longer presence. A positive effect on local competitors is not significantly affected by distance and requires the presence of mature foreign firms.

Suggested Citation

  • Bruno Merlevede & Victoria Purice, 2014. "Distance, Time since Foreign Entry, and Knowledge Spillovers from Foreign Direct Investment," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/896, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:14/896
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    File URL: http://wps-feb.ugent.be/Papers/wp_14_896.pdf
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    References listed on IDEAS

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    Cited by:

    1. Veronika Hecht, 2015. "Location choice of German multinationals in the Czech Republic. The importance of agglomeration economies," FIW Working Paper series 159, FIW.

    More about this item

    Keywords

    FDI; Spillovers; Dynamics; Timing; Regions; Distance;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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