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Foreign direct investment spillovers: what can we learn from portuguese data?

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  • Fontoura, Maria Paula
  • Flôres Junior, Renato Galvão
  • Santos, Rogério Guerra

Abstract

This paper investigates the impact of foreign direct investment on the productivity performance of domestic firms in Portugal. The data comprise nine manufacturing sectors for the period 1992-95. Relatively to previous studies, model specification is improved by taking into consideration several aspects: the influence of the 'technological gap' on spill-overs diffusion and the choice of its most appropriate interval; sectoral variation in the coefficients of the spill-overs effect; identification of constant, idiosyncratic sectoral factors by means of a fixed effects model; and the search for inter-sectoral positive spillover effects. The relationship between domestic firms productivity and the foreign presence does take place in a positive way, only if a proper technology differential between the foreign and domestic producers exists and the sectoral characteristics are favourable. In broad terms, spillovers diffusion is associated to modern industries in which the foreign owned establishments have a clear, but not too sharp, edge on the domestic ones. Besides, other specific sectoral influences can be pertinent; agglomerative location factors being one example.

Suggested Citation

  • Fontoura, Maria Paula & Flôres Junior, Renato Galvão & Santos, Rogério Guerra, 2000. "Foreign direct investment spillovers: what can we learn from portuguese data?," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 366, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    • Handle: RePEc:fgv:epgewp:366
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    References listed on IDEAS

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    1. Aitken, Brian & Harrison, Ann & DEC, 1994. "Do domestic firms benefit from foreign direct investment? Evidence from panel data," Policy Research Working Paper Series 1248, The World Bank.
    2. Djankov, Simeon & Hoekman, Bernard M, 2000. "Foreign Investment and Productivity Growth in Czech Enterprises," The World Bank Economic Review, World Bank, vol. 14(1), pages 49-64, January.
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    Cited by:

    1. bouoiyour, jamal, 2006. "Productivité du travail, capital humain et écart technologique dans les industries manufacturières marocaines [Labor productivity, human capital and technology gap in manufacturing Moroccan]," MPRA Paper 37035, University Library of Munich, Germany.
    2. Isabel Proença & Maria Paula Fontoura & Nuno Crespo, 2002. "Productivity Spillovers from Multinational Corporations in the Portuguese Case: Evidence from a Short Time Period Panel Data," Working Papers Department of Economics 2002/06, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    3. Davide Castellani & Antonello Zanfei, 2001. "Productivity Gaps, Inward Investments and Productivity of European firms," International Trade 0107001, University Library of Munich, Germany.
    4. Guest Editors & Ana Teresa Tavares & Stephen Young, 2005. "FDI and multinationals: patterns, impacts and policies," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 3-16.
    5. Mita Bhattacharya & Jong-Rong Chen & V. Pradeep Author-X-Name- V, 2008. "Productivity Spillovers In Indian Manufacturing Firms," Monash Economics Working Papers 30/08, Monash University, Department of Economics.

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