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FDI productivity spillovers and absorptive capacity in Brazilian firms: A threshold regression analysis

Herick Fernando Moralles and Rosina Moreno

International Review of Economics & Finance, 2020, vol. 70, issue C, 257-272

Abstract: Literature points out that foreign direct investment (FDI) brings firm-level productivity spillovers. However, few studies have been conducted in Latin-American economies. By using a unique Brazilian county-level FDI database, this paper explores whether the effect of the amount of FDI at the county level on firms’ productivity growth depends on certain minimum levels of local companies’ absorptive capacity. To do it, we use a threshold regression model, a formulation that appears to be robust to assess the specificities of developing economies. Results indicate that when FDI is set as the threshold and regime-dependent variable, Brazilian firms may suffer from negative productivity spillovers. However, local firms may collect positive spillovers if they are endowed with high absorptive capacity.

Keywords: Foreign direct investment (FDI); Spillover; Threshold; Absorptive capacity; Brazil (search for similar items in EconPapers)
JEL-codes: C24 D2 O33 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.iref.2020.07.005

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Handle: RePEc:eee:reveco:v:70:y:2020:i:c:p:257-272