Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 268: Technology Transfer and Spillovers: Does Local Participation with Multinationals Matter?

Magnus Blomström () and Fredrik Sjöholm ()
Additional contact information
Magnus Blomström: The European Institute of Japanese Studies at the Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden
Fredrik Sjöholm: The European Institute of Japanese Studies at the Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: This paper examines the effects on technology transfer and spillovers deriving from ownership sharing of foreign multinational affiliates. More specifically, we try to answer two questions, using unpublished Indonesian micro data. Firstly, do establishments with minority and majority ownership differ in terms of productivity levels? Secondly, does the degree of spillover differ with the degree of ownership in the FDI? Our results show that foreign establishments have comparable high levels of labor productivity and that domestic establishments benefit from spillovers. However, the degree of foreign ownership does neither affect the level of labor productivity in foreign establishments, nor the degree of spillovers.

Keywords: Joint venture; productivity; spillovers; Indonesia; foreign direct investment

JEL-codes: F23; O30

15 pages, October 12, 1998

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