ENERGY EFFICIENCY GAINS FROM MULTINATIONAL SUPPLY CHAINS: EVIDENCE FROM TURKEY

Michele Imbruno, Alessia Lo Turco and Daniela Maggioni

No 477, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: We inspect whether multinational supply chains bring energy efficiency gains to domestic firms active in a host country. Our theoretical model suggests that the presence of foreign firms in upstream manufacturing and energy industries expands the availability of high-quality inputs for downstream domestic firms, implying a reduction in their energy intensity. We test these theoretical predictions using data from Turkish manufacturing firms over the period 2010-2015. Our empirical analysis shows that domestic-owned firms in sectors that are more likely to buy manufacturing and energy inputs from foreign-owned suppliers tend to reduce their energy intensity, confirming environmental gains from FDI. When exploring the underlying mechanisms, we provide evidence that the presence of foreign firms in upstream sectors leads to an increase in the quality of available inputs which turns into improvements in downstream domestic firms' energy efficiency.

Keywords: Energy Efficiency; FDI; MNEs; Turkey (search for similar items in EconPapers)
JEL-codes: D22 F23 L20 (search for similar items in EconPapers)
Pages: 41
Date: 2023-04
New Economics Papers: this item is included in nep-ara, nep-des, nep-eff, nep-ene, nep-env and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wpaper:477

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