FDI Spillovers and the Timing of Foreign Entry

Bruno Merlevede, Koen Schoors and Mariana Spatareanu

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: This study analyzes the dynamic effect of FDI on local firms’ productivity by relaxing the standard implicit assumption that technological spillovers are immediate and permanent. We find that the entry of majority foreign owned firms has a short run negative effect on the productivity of local competitors, which is more than offset by a longer run positive effect. The entry of minority foreign owned firms has an immediate, though short-lived, positive effect on local suppliers through backward linkages. The entry of majority foreign owned firms also improves the productivity of local suppliers, but the effect materializes later and lasts longer.

Keywords: FDI; spillovers; dynamics; timing (search for similar items in EconPapers)
JEL-codes: F2 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-int, nep-opm and nep-tid
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:26710

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