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Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Investment?
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In this paper, a comprehensive evaluation of the empirical evidence on productivity, wages and exports spillovers in developing, developed and transitional economies is presented. But, although theory can identify a range of possible spillover channels, robust empirical support for positive spillovers is hard to find.Abstract:
Many governments offer significant inducements to attract inward investment, motivated by the expectation of spillover benefits. This paper begins by reviewing possible sources of spillovers. It then provides a comprehensive evaluation of the empirical evidence on productivity, wages and exports spillovers in developing, developed and transitional economies. Although theory can identify a range of possible spillover channels, robust empirical support for positive spillovers is hard to find. The reasons for this are explored and the paper concludes with a review of policy aspects.read more
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References
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A sensitivity analysis of cross-country growth regressions
Robert A. Levine,David Renelt +1 more
TL;DR: In this article, the authors study whether the conclusions from existing studies are robust or fragile when small changes in the list of independent variables occur, and they find that although "policy"appears to be importantly related to growth, there is no strong independent relationship between growth and almost every existing policy indicator.
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A sensitivity analysis of cross-country growth regressions
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How does foreign direct investment affect economic growth
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Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages
TL;DR: In this paper, the authors studied the impact of trade and foreign direct investment on the productivity of domestic firms in the manufacturing sector in the country of Lithuania and found that a 10 percent increase in the foreign presence in downstream sectors is associated with a 0.38 percent rise in output of each domestic firm in the supplying industry.
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