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Foreign Direct Investment and Firm Level Productivity in Kenyan Manufacturing: A Panel Data Analysis

Author

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  • Geoffrey G. Gachino

    (College of Business Administration, University of Dubai)

Abstract

This paper uses panel data to examine the effects of foreign presence on firm level productivity in the Kenyan manufacturing industry employing “traditional” and “recent” methodologies using the production function framework. The results show that foreign firms dominated in virtually all the economic activities, including productivity performance. The analysis of productivity determinants using a technologically profound approach produced a statistically significant role played by foreign presence on firm level productivity, thus supporting the occurrence of spillovers. The paper argues that the use of productivity based methodologies largely masks the nature, actual processes and mechanisms through which spillovers occur. The paper, therefore, advocates a “paradigm shift” in the spillover analysis techniques and recommends a broader approach with particular emphasis on technological innovations which takes into consideration learning, capability building and innovation.

Suggested Citation

  • Geoffrey G. Gachino, 2010. "Foreign Direct Investment and Firm Level Productivity in Kenyan Manufacturing: A Panel Data Analysis," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 2(1), pages 17-57, April.
    • Handle: RePEc:umk:journl:v:2:y:2010:i:1:p:17-57
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    File URL: http://ijie.um.edu.my/RePEc/umk/journl/v2i1/a2.pdf
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    Cited by:

    1. Geoffrey G. Gachino, 2011. "Determinants of FDI Spillover in the Kenyan Manufacturing Industry: Firm-Level Evidence," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 10(3), pages 235-255, December.

    More about this item

    Keywords

    - FDI; foreign presence; spillovers; productivity; technological innovation;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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