Foreign Direct Investment and Efficiency Benefits: A Conditional Quantile Analysis

Sophia Dimelis () and Helen Louri

No 2868, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper analyses the production efficiency gains in terms of technology transfer and labour productivity changes caused by diverse degrees of foreign ownership. The analysis is based on a sample of 4056 domestic and foreign manufacturing firms operating in Greece in 1997. Departures from normality of labour productivity and its logarithm led to the adoption of the robust technique of quantile regression as providing a better view of the examined relationships by obtaining estimates at different quantiles. Interesting results include a positive and significant effect of foreign ownership on labour productivity which stems exclusively from full and majority owned affiliates and becomes significant only in the middle quantiles. Productivity spillovers benefiting local firms are also differentiated by degree of foreign ownership, with minority holdings exercising a stronger effect in most quantiles. Such distinct FDI effects stress the importance of policy modifications according to the level of development in the host economy, and the selected objectives.

Keywords: Productivity; Spillovers; Multinationals; Fdi (search for similar items in EconPapers)
JEL-codes: F23 O30 (search for similar items in EconPapers)
Date: 2001-06
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Citations: View citations in EconPapers (24)

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