IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/66243.html
   My bibliography  Save this paper

Foreign Direct Investment and Productivity Spillovers: Identifying Linkages through Product-based Measures

Author

Listed:
  • Taymaz, Erol
  • Yilmaz, Kamil

Abstract

This article analyzes direct and indirect effects of foreign ownership on productivity in the Turkish manufacturing plants between 1990 and 1996. First, based on Olley-Pakes production function estimates, foreign affiliates are shown to be more productive than local plants. Using sectoral output shares of foreign affiliates and 1990 input-output matrix to identify linkages across plants, regression results show that productivity spillovers from foreign affiliates to local plants took place through horizontal and vertical linkages. However, these results mostly lose their economic and statistical significance once plant-level data on the value of output and inputs are used to obtain product-based measures of linkages across plants. The magnitude of spillover effects are much smaller than the ones obtained with industry-based measures. Statistically meaningful positive spillovers are found to be generated through backward linkages only.

Suggested Citation

  • Taymaz, Erol & Yilmaz, Kamil, 2008. "Foreign Direct Investment and Productivity Spillovers: Identifying Linkages through Product-based Measures," MPRA Paper 66243, University Library of Munich, Germany, revised 2009.
    • Handle: RePEc:pra:mprapa:66243
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/66243/1/MPRA_paper_66243.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2007. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 482-496, August.
    2. Brian J. Aitken & Ann E. Harrison, 2022. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 6, pages 139-152, World Scientific Publishing Co. Pte. Ltd..
    3. Wolfgang Keller & Stephen R. Yeaple, 2009. "Multinational Enterprises, International Trade, and Productivity Growth: Firm-Level Evidence from the United States," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 821-831, November.
    4. K. Schoors & B. Van Der Tol, 2002. "Foreign direct investment spillovers within and between sectors: Evidence from Hungarian data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/157, Ghent University, Faculty of Economics and Business Administration.
    5. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    6. Sule Ozler & Kamil Yilmaz, 2009. "Productivity response to reduction in trade barriers: evidence from Turkish manufacturing plants," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 339-360, July.
    7. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc.
    8. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    9. Aykut Lenger & Erol Taymaz, 2007. "To innovate or to transfer?," Springer Books, in: Uwe Cantner & Franco Malerba (ed.), Innovation, Industrial Dynamics and Structural Transformation, pages 303-319, Springer.
    10. 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.
    11. Holger Görg & Eric Strobl, 2016. "Multinational Companies And Productivity Spillovers: A Meta-Analysis," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 8, pages 145-161, World Scientific Publishing Co. Pte. Ltd..
    12. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Multinational Corporations and Spillovers," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 8, pages 101-133, Palgrave Macmillan.
    13. repec:bla:jecsur:v:12:y:1998:i:3:p:247-77 is not listed on IDEAS
    14. Harrison, Ann & Haddad, Mona, 1993. "Are there dynamic externalities from direct foreign investment? Evidence for Morocco," MPRA Paper 36279, University Library of Munich, Germany.
    15. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    16. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    17. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Syeda Tamkeen Fatima, 2016. "Productivity spillovers from foreign direct investment: evidence from Turkish micro-level data," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(3), pages 291-324, June.
    2. Iršová, Zuzana & Havránek, Tomáš, 2013. "Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis," World Development, Elsevier, vol. 42(C), pages 1-15.
    3. Conti, Giuliano & Lo Turco, Alessia & Maggioni, Daniela, 2014. "Spillovers through backward linkages and the export performance of business services. Evidence from a sample of Italian firms," International Business Review, Elsevier, vol. 23(3), pages 552-565.
    4. Tomáš Havránek & Zuzana Iršová, 2011. "How to Stir Up FDI Spillovers: Evidence from a Large Meta-Analysis," Working Papers IES 2011/34, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2011.
    5. Alper Sönmez & M. Teoman Pamukçu, 2011. "Foreign Direct Investment and Technology Spillovers in the Turkish Manufacturing Industry," STPS Working Papers 1103, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised Mar 2011.
    6. Anagaw Derseh Mebratie & Arjun S. Bedi, 2013. "Foreign direct investment, black economic empowerment and labour productivity in South Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(1), pages 103-128, February.
    7. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    8. Tomas Havranek & Zuzana Irsova, 2012. "Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(10), pages 1375-1396, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammed BENLI, 2016. "Productivity spillovers from FDI in Turkey: Evidence from quantile regressions," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 177-196, Autumn.
    2. Muhammed BENLI, 2016. "Productivity spillovers from FDI in Turkey: Evidence from quantile regressions," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(608), A), pages 177-196, Autumn.
    3. Seda Köymen Özer & Selin Sayek Böke, 2017. "The Characteristics of Domestic Firms: Materializing Productivity Spillovers from FDI," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(11), pages 2562-2584, November.
    4. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    5. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
    6. Damijan, Jože P. & Rojec, Matija & Majcen, Boris & Knell, Mark, 2013. "Impact of firm heterogeneity on direct and spillover effects of FDI: Micro-evidence from ten transition countries," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 895-922.
    7. Arnold, Jens Matthias & Javorcik, Beata Smarzynska, 2005. "Gifted kids or pushy parents? Foreign acquisitions and plant performance in Indonesia," Policy Research Working Paper Series 3597, The World Bank.
    8. Pavel Vacek, 2010. "Panel Data Evidence on Productivity Spillovers from Foreign Direct Investment: Firm-Level Measures of Backward and Forward Linkages," Working Papers IES 2010/19, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2010.
    9. Marcella Nicolini & Laura Resmini, 2006. "The Impact of Mnes on Domestic Firms in CEECS: A Micro-Econometric Approach," ERSA conference papers ersa06p411, European Regional Science Association.
    10. Sourafel Girma & Holger Görg & Mauro Pisu, 2016. "Exporting, linkages and productivity spillovers from foreign direct investment," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 10, pages 191-211, World Scientific Publishing Co. Pte. Ltd..
    11. Shandre M. Thangavelu & Sanja Samirana Pattnayak, 2006. "Linkages and Spillovers from Foreign Ownership in the Indian Pharmaceutical Firms," SCAPE Policy Research Working Paper Series 0605, National University of Singapore, Department of Economics, SCAPE.
    12. Sarker, Bibhuti & Serieux, John, 2022. "Foreign-invested and domestic firm attributes and spillover effects: Evidence from Brazil," Journal of Multinational Financial Management, Elsevier, vol. 63(C).
    13. Anabel Marin & Martin Bell, 2006. "Technology spillovers from Foreign Direct Investment (FDI): the active role of MNC subsidiaries in Argentina in the 1990s," Journal of Development Studies, Taylor & Francis Journals, vol. 42(4), pages 678-697.
    14. Emmanuel Dhyne & Selen Sarisoy Guerin, 2014. "Outward foreign direct investment and domestic performance : In search of a causal link," Working Paper Research 272, National Bank of Belgium.
    15. Kuzyaeva Anastasia & Didenko Alexander, 2014. "Productivity spillovers in the Russian Federation: the case of the chemical market," Review of Business and Economics Studies, CyberLeninka;Федеральное государственное образовательное бюджетное учреждение высшего профессионального образования «Финансовый университет при Правительстве Российской Федерации» (Финансовый университет), issue 3, pages 55-74.
    16. Muhammed BENLI, 2016. "FDI and export spillovers using Heckman’s two step approach: Evidence from Turkish manufacturing data," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(609), W), pages 315-342, Winter.
    17. Cole, Matthew A. & Elliott, Robert J.R. & Strobl, Eric, 2008. "The environmental performance of firms: The role of foreign ownership, training, and experience," Ecological Economics, Elsevier, vol. 65(3), pages 538-546, April.
    18. Thanh Tam Nguyen-Huu & Ngoc-Sang Pham, 2021. "Escaping the middle income trap and getting economic growth: How does FDI can help the host country?," Working Papers halshs-03143087, HAL.
    19. Lin, Ping & Liu, Zhuomin & Zhang, Yifan, 2009. "Do Chinese domestic firms benefit from FDI inflow?: Evidence of horizontal and vertical spillovers," China Economic Review, Elsevier, vol. 20(4), pages 677-691, December.
    20. Tomáš Havránek & Zuzana Iršová, 2010. "Meta-Analysis of Intra-Industry FDI Spillovers: Updated Evidence," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 60(2), pages 151-174, May.

    More about this item

    Keywords

    Foreign Direct Investment; Productivity; Horizontal and vertical linkages; Semi-parametric estimations.;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:66243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.