Foreign Direct Investment and Productivity Spillovers: the Experience of ASEAN Countries

Nathapornpan PIYAAREEKUL UTTAMA () and Nicolas Peridy ()
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Nathapornpan PIYAAREEKUL UTTAMA: Mae Fah Luang University, Postal: Mae Fah Luang University, Economics, Program, School of Management, 333 Moo 1 Tasud, Muang, Chiang Rai, Thailand

Journal of Economic Integration, 2010, vol. 25, pages 298-323

Abstract:

This paper aims at investigating the productivity spillover effects of FDI inflows to ASEAN countries. A first contribution is related to the development of an original theoretical model of complex multinational firms which simultaneously explores backward and forward linkages due to FDI. As a second contribution, the significance of vertical productivity spillovers in ASEAN countries is tested empirically. For that purpose, and given the lack of data at firm level, the causal relationship between FDI and productivity is investigated by using countryspecific data. Several alternative causality tests are implemented, including both direct and indirect approaches. The main results give strong evidence that FDI causes productivity growth in ASEAN countries. These results correlate the prediction of the theoretical model, which provide a strong support for the relationship between FDI and productivity spillovers.

Keywords: ASEAN; FDI; Spillover Effects; Panel Data (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2010
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Persistent link: http://EconPapers.repec.org/RePEc:ris:integr:0506

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