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Foreign Direct Investment and Knowledge Diffusion in Poor Locations

Girum Abebe, Margaret McMillan and Michel Serafinelli

No 1913, RF Berlin - CReAM Discussion Paper Series from Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM)

Abstract: We use a plant level survey to identify interactions between domestic plants and foreign direct investment (FDI) in Ethiopia’s manufacturing sector. Almost one third of Ethiopian plants report being linked to FDI through labor sharing, forward and backward linkages and competition in input and output markets. Domestic plant managers report that through these linkages with FDI, they learn about production processes, managerial and organizational practices and exporting. We quantify the spillovers from FDI at the local level by comparing changes in total factor productivity (TFP) among domestic plants in districts where a large greenfield foreign plant produced and districts where FDI in the same industry and around the same time was licensed but not yet operational. Over the four years starting with the year of the FDI opening, the TFP of domestic plants is 11 percent higher in treated districts, employment in these domestic plants increases and new domestic plants open.

Keywords: Foreign Direct Investment; productivity; localized knowledge spillovers; plant-to-plant labor mobility. (search for similar items in EconPapers)
JEL-codes: D24 F21 R10 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-eff, nep-geo, nep-int and nep-knm
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Foreign direct investment and knowledge diffusion in poor locations (2022) Downloads
Working Paper: Foreign Direct Investment and Knowledge Diffusion in Poor Locations (2020) Downloads
Working Paper: Foreign Direct Investment and Knowledge Diffusion in Poor Locations (2018) Downloads
Working Paper: Foreign Direct Investment and Knowledge Diffusion in Poor Locations Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:1913

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