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PRODUCTIVITY SPILLOVERS FROM MULTINATIONAL CORPORATIONS IN PORTUGAL: VULNERABILITY TO DEFICIENT ESTIMATION

Isabel Proença (isabelp@iseg.ulisboa.pt), Maria Paula Fontoura and Nuno Crespo (nuno.crespo@iscte.pt)

Applied Econometrics and International Development, 2006, vol. 6, issue 1

Abstract: Evidence on productivity spillovers from FDI to domestic firms is ambiguous. Incorrect estimation procedures may be one of the sources for the contradictory results obtained in empirical studies on this subject. We observe that inadequacy of the estimation procedures leads to a severe underestimation of the spillover effect. An appropriated econometric methodology is discussed taking into consideration the possible simultaneity of FDI and other explanatory variables and endogeneity related to firm unobserved heterogeneity. Robust inference is also addressed. Our findings for the Portuguese case seem sufficient clear to warn about spillover results obtained with a non-judicious application of the classical panel data methods.

Keywords: domestic firm productivity; multinational corporations; technological spillovers; panel data; Extended GMM (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (10)

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