Multinational companies and productivity spillovers: is there a specification error?
Davide Castellani () and
Antonello Zanfei ()
Applied Economics Letters, 2007, vol. 14, issue 14, 1047-1051
Recent empirical works on the within-sector impact of inward investments on domestic firms' productivity have found rather robust evidence of no (or even negative) effects. We suggest that, among other reasons, a specification error might explain some of these results. A more general specification, which includes the usual one as a special case, is proposed. Using data on Italian manufacturing firms in 1992-2000, we find positive externalities only once we allow for the more flexible specification.
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