Foreign direct investment spillovers and technical efficiency in the Indonesian pharmaceutical sector: firm level evidence

Suyanto Suyanto () and Ruhul Salim

Applied Economics, 2013, vol. 45, issue 3, 383-395

Abstract: The spillovers of Foreign Direct Investment (FDI) on domestic firms’ performances have been highly debated for many years. This article contributes to this debate by analysing spillovers effects on technical efficiency of Indonesian pharmaceutical sector using a unique unbalanced panel of highly disaggregated (at five-digit International Standard Industrial Classification (ISIC)) 210 firms over the period 1990–1995 (1001 observations). The Stochastic Production Frontier (SPF) and the Data Envelopment Analysis (DEA) based on Malmquist Productivity Indices (MPI) have been used to test the spillovers effects of FDI on technical efficiency. The empirical results from the SPF show that foreign firms are more efficient than domestic competitors, and the presence of the former increases the inefficiency of the latter. Similarly the results from the MPI demonstrate that FDI has a negative and significant impact on technical efficiency changes in domestic competitors, but generate positive spillovers to domestic suppliers.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2011.605554 (text/html)
Access to full text is restricted to subscribers.

Related works:
Journal Article: Foreign direct investment spillovers and technical efficiency in the Indonesian pharmaceutical sector: firm level evidence (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:45:y:2013:i:3:p:383-395

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2011.605554

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().