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Supply chain fragmentation, input--output tables and spillovers from foreign direct investment

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  • Karolien Lenaerts
  • Bruno Merlevede

Abstract

The literature on the impact of multinationals on domestic firms' productivity points to supply chain linkages with multinational firms as the main channel for positive spillover effects. Local and multinational firms' relative positions in the supply chain are typically determined through the use of input--output tables. For a panel of Romanian firms, we show that the level of industry aggregation in these tables and the applied spillover definitions bear an important impact on estimated spillover effects. We find that the total impact of foreign presence -- irrespective of the channel -- is considerably larger when detailed IO-tables are used. When more aggregated tables are used, one is likely to misclassify a considerable number of supplier--client activity as within-industry competitive activity. Including within-industry supply and use in the measures of supplier--client activity results in a further increase of the spillover effect on local suppliers, whereas the within-industry spillover effect disappears.

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  • Karolien Lenaerts & Bruno Merlevede, 2016. "Supply chain fragmentation, input--output tables and spillovers from foreign direct investment," Economic Systems Research, Taylor & Francis Journals, vol. 28(3), pages 315-332, September.
    • Handle: RePEc:taf:ecsysr:v:28:y:2016:i:3:p:315-332
    DOI: 10.1080/09535314.2016.1187118
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    Cited by:

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    2. Karolien Lenaerts & Bruno Merlevede, 2018. "Indirect productivity effects from foreign direct investment and multinational firm heterogeneity," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 377-400, May.
    3. Wei Zhen & Quande Qin & Lei Jiang, 2022. "Heterogeneous Domestic Intermediate Input-Related Carbon Emissions in China’s Exports," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(3), pages 453-479, March.

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