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Knowledge Spillovers and the Timing of Foreign Entry

  • Bruno Merlevede

    ()

  • Koen Schoors
  • Mariana Spatareanu

    ()

We analyze how foreign presence affects local ?firm productivity. We relax the standard implicit assumption that spillovers are immediate and permanent. We ?find that spillovers are dynamic. Foreign entry of a majority foreign owned fi?rm has a short run negative effect on the productivity of local competitors, which is more than offset by a longer run positive effect. The entry of minority foreign owned fi?rms has an immediate, though short-lived, positive effect on local suppliers. The entry of majority foreign owned fi?rms also improves the productivity of local suppliers, but the effect materializes later and lasts longer.

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File URL: http://www.ncas.rutgers.edu/department-economics/workingpaper20101
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Paper provided by Department of Economics, Rutgers University, Newark in its series Working Papers Rutgers University, Newark with number 2010-001.

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Length: 29 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:run:wpaper:2010-001
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Web page: http://www.ncas.rutgers.edu/economics

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