FDI Spillovers, Import Competition and Export Intensity - Evidence for Romanian Manufacturing Firms

This paper investigates the integration of internationalisation in terms of import competition and export intensity at the industry level into the FDI spillover framework for a panel of Romanian manufacturing firms. Whereas the FDI spillover discussion is framed in terms of the presence of foreign firms, we argue that one could likewise frame this discussion in terms of import competition or export intensity. Then the question arises whether the findings in the FDI spillover literature are falsely attributed to foreign presence while they actually originate from internationalisation. If not, it is still possible that internationalisation spillover effects behave in a similar way as FDI spillover effects and that there is some trade-off between both. On the other hand foreign presence and internationalisation may also reinforce one another. We find that intraindustry FDI spillover effects are negative, but insignificant, while intraindustry internationalisation spillover effects are significantly positive. Interindustry effects seem to be largely absent if interaction terms are not included. Interaction effects suggest a trade- off between FDI and internationalisation. This holds both for intra and interindustry effects. Throughout our results we find indications that import competition is more beneficial to domestic firms’ productivity than export intensity at the industry level. Overall, we find no indication that the findings of the FDI spillover literature are falsely attributed to foreign presence while they actually originate from internationalisation.