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How does FDI inflow affect productivity of domestic firms? The role of horizontal and vertical spillovers, absorptive capacity and competition

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Abstract

This paper examines the existence of externalities associated with FDI in host country by exploiting firm-level panel data covering the Polish corporate sector. The main findings are as follows: Local firms benefit form foreign presence in the same industry and in downstream industries. Absorptive capacity of domestci firms is highly relevant to the size of spillovers. Competetive pressure faciliates backward spillovers, while market power increases the extent of forward spilovers. Host country equity participation in foreign firms is consistent with higher unconditional productivity spillovers to domestic firms.

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  • Marcin Kolasa, 2007. "How does FDI inflow affect productivity of domestic firms? The role of horizontal and vertical spillovers, absorptive capacity and competition," NBP Working Papers 42, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:42
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    More about this item

    Keywords

    foreign direct investment; spillovers; firm-level data;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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