Productivity spillovers from FDI and the role of domestic firm’s absorptive capacity in South Korean manufacturing industries

Minjung Kim ()

Empirical Economics, 2015, vol. 48, issue 2, 807-827

Abstract: This paper investigates productivity spillovers from foreign direct investment (FDI) and the absorptive capacity of domestic firms using the firm level data of South Korean manufacturing industries. This paper finds that the absorptive capacity has as a role in mitigating the negative spillovers from FDI by capturing additional positive spillovers from FDI. Thus, firms without any absorptive capacity suffer more from FDI than firms with absorptive capacity. However, when the endogeneity problems in absorptive capacity such as R&D and export activity variables are considered, the role of absorptive capacity becomes too insignificant to alleviate the negative spillovers from FDI. In addition, the results from simultaneous quantile regression indicate that the effect of R&D and export activity to absorb the additional spillovers is heterogeneous depending on the conditional productivity distribution. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Foreign direct investment (FDI); Productivity spillovers; Absorptive capacity; Simultaneous quantile regression; F2; O1; O3 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (12)

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DOI: 10.1007/s00181-014-0804-z

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