FDI, Intermediate Inputs and Firm Performance: Theory and Evidence from Italy
Michele Imbruno,
Rosanna Pittiglio (rosanna.pittiglio@unicampania.it) and
Filippo Reganati (filippo.reganati@uniroma1.it)
No 2015-15, Discussion Papers from University of Nottingham, GEP
Abstract:
This paper theoretically and empirically studies – using data from Italian manufacturing firms – how the foreign presence in the intermediate good sector (i.e. input FDI) affects firm efficiency and aggregate productivity within final good sector. We show that an important role is played by the absorptive capacity. More specifically, if all firms are able to use intermediate inputs from foreign-owned suppliers, then all of them will enjoy productivity gains from input FDI without any reallocation effect. Conversely, if only the most productive firms can use intermediate inputs from foreign-owned suppliers, while these firms can enhance further their efficiency, the other firms might suffer productivity losses from input FDI, causing some reallocation effects within final good sector.
Keywords: Heterogeneous firms; multinationals; FDI; intermediate inputs; productivity (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:15/15
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