BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 27/2013:
FDI spillovers and time since foreign entry
Bruno Merlevede ()
, Koen Schoors ()
and Mariana Spatareanu ()
Abstract: This study measures the effect of foreign direct
investment (FDI) on the productivity of local firms. Unlike earlier
studies, our empirical approach does not require that FDI manifests
immediate or permanent effects. We find that foreign entry initially
affects productivity of local competitors negatively, but is more than
offset by a permanent positive effect on local competitors once
majority-foreign-owned firms have been present for a while. The effect on
the productivity of local suppliers, in contrast, is transient. The entry
of majority-foreign-owned firms boosts productivity of local suppliers
after a short adaption period, but then fades. The positive impact of
minority-foreign-owned firms on local suppliers is immediate, but smaller
and transient.
Keywords: FDI; spillovers; dynamics; timing; (follow links to similar papers)
JEL-Codes: F23; (follow links to similar papers)
47 pages, November 4, 2013
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