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FDI and the Consequences: Towards more complete capture of spillover effects

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  • Ken Schoors
  • Bruno Merlevede

Abstract

We analyze productivity spillovers of FDI on domestic companies, both within and across industries. In the identification of intraindustry spillovers, we separate out labor market effects from other effects. Interindustry spillovers are identified through upstream, downstream, and supply-backward linkage effects. Dynamic input output tables are used to construct the linkages. For a panel of Romanian firms, we find evidence that labor market effects differ from other intraindustry effects. Spillovers across industries dominate those within industries. The supply-backward effect behaves as predicted by theory. Firm-specific level of technology, firm size, and ownership structure are all found to affect spillovers.

Suggested Citation

  • Ken Schoors & Bruno Merlevede, 2007. "FDI and the Consequences: Towards more complete capture of spillover effects," William Davidson Institute Working Papers Series wp886, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2007-886
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    Cited by:

    1. Adam GERŠL, 2008. "Productivity, Export Performance, and Financing of the Czech Corporate Sector: The Effects of Foreign Direct Investment," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(05-06), pages 232-247, August.
    2. Monastiriotis, Vassilis, 2014. "Origin of FDI and domestic productivity spillovers: does European FDI have a 'productivity advantage' in the ENP countries?," LSE Research Online Documents on Economics 55267, London School of Economics and Political Science, LSE Library.
    3. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
    4. Bessonova, Eugenia, 2010. "Efficiency of Manufacturing in Russia: Effect of Domestic Competition and FDI," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 17(1), pages 106-127.
    5. Tomas Havranek & Zuzana Irsova, 2011. "How to Stir Up FDI Spillovers: Evidence from a Large Meta-Analysis," William Davidson Institute Working Papers Series wp1021, William Davidson Institute at the University of Michigan.
    6. Merlevede, Bruno & Schoors, Koen & Spatareanu, Mariana, 2014. "FDI Spillovers and Time since Foreign Entry," World Development, Elsevier, vol. 56(C), pages 108-126.
    7. Nuno Crespo & Maria Paula Fontoura & Isabel Proença, 2009. "FDI spillovers at regional level: Evidence from Portugal," Papers in Regional Science, Wiley Blackwell, vol. 88(3), pages 591-607, August.
    8. 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.
    9. Joze P. Damijan & Jose de Sousa & Olivier Lamotte, 2008. "Does international openness affect productivity of local firms? Evidence from Southeastern Europe," LICOS Discussion Papers 21908, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    10. Eric Rugraff, 2010. "Strengths and weaknesses of the outward FDI paths of the Central European countries," Post-Communist Economies, Taylor & Francis Journals, vol. 22(1), pages 1-17.
    11. Jože P. Damijan & José De Sousa & Olivier Lamotte, 2009. "Does international openness affect the productivity of local firms?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(3), pages 559-586, July.
    12. Bruno Merlevede & Koen Schoors & Mariana Spatareanu, 2010. "FDI Spillovers and the Timing of Foreign Entry," LICOS Discussion Papers 26710, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    13. Marin, Anabel & Sasidharan, Subash, 2010. "Heterogeneous MNC subsidiaries and technological spillovers: Explaining positive and negative effects in India," Research Policy, Elsevier, vol. 39(9), pages 1227-1241, November.
    14. Cristina JUDE, 2012. "Horizontal and Vertical Technology Spillovers from FDI in Eastern Europe," LEO Working Papers / DR LEO 710, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    15. Monastiriotis, Vassilis, 2016. "Institutional proximity and the size and geography of FDI spillovers: do European firms generate more favourable productivity spillovers in the EU neighbourhood?," LSE Research Online Documents on Economics 66141, London School of Economics and Political Science, LSE Library.
    16. Václav Žďárek, 2009. "Moderní způsoby produkce a přímé zahraniční investice [Modern methods of production and foreign direct investment]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(4), pages 509-543.
    17. Adam Gersl & Ieva Rubene & Tina Zumer, 2007. "Foreign Direct Investment and Productivity Spillovers: Updated Evidence from Central and Eastern Europe," Working Papers 2007/8, Czech National Bank.
    18. Barbosa, Natália & Eiriz, Vasco, 2009. "Linking corporate productivity to foreign direct investment: An empirical assessment," International Business Review, Elsevier, vol. 18(1), pages 1-13, February.
    19. Vassilis Monastiriotis, 2016. "Institutional proximity and the size and geography of foreign direct investment spillovers: Do European firms generate more favourable productivity spillovers in the European Union neighbourhood?," Environment and Planning C, , vol. 34(4), pages 676-697, June.
    20. Tomáš Havránek & Zuzana Iršová, 2010. "Meta-Analysis of Intra-Industry FDI Spillovers: Updated Evidence," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 60(2), pages 151-174, May.
    21. Tomas Havranek & Zuzana Irsova, 2012. "Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(10), pages 1375-1396, October.
    22. Bruno Merlevede & Koen Schoors & Mariana Spatareanu, 2010. "Knowledge Spillovers and the Timing of Foreign Entry," Working Papers Rutgers University, Newark 2010-001, Department of Economics, Rutgers University, Newark.
    23. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2010. "Does foreign direct investment promote growth? Exploring the role of financial markets on linkages," Journal of Development Economics, Elsevier, vol. 91(2), pages 242-256, March.

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    More about this item

    Keywords

    FDI; spillovers; absorptive capability; firm size; ownership structure;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business

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