FDI Horizontal and Vertical Effects on Local Firm Technical Efficiency

Chuc Nguyen, Gary Simpson, David Saal, Anh Nguyen () and Pham Ngoc
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Gary Simpson: Aston Business School, Aston University, UK

No 17, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: Differencing from previous studies on foreign direct investment (FDI) spillovers to domestic enterprises which mainly focus on productivity, in this paper we take a different perspective by analysing the impacts of FDI to technical efficiency of domestic firms. The paper goes beyond the current literature to shed some light on the spillover effects of FDI to technical efficiency of small and medium enterprises in a developing country. By exploiting a firm-level panel dataset and using SFA models following Battese and Coelli (1995), the paper is able to analyse horizontal spillovers through imitation and competition and labour mobility as well as vertical spillovers through backward and forward linkages on technical efficiency. The paper contributes to the understanding of potential effects on foreign invested enterprises on domestic economy in general and local enterprises performance in particular. Thus it importantly assists policy making by the government of developing countries, where FDI is believed to create technical spillovers on domestic enterprises.

Keywords: Technical Efficiency; Foreign Direct Investment; Spillovers (search for similar items in EconPapers)
Pages: 22 pages
Date: 2008
New Economics Papers: this item is included in nep-eff, nep-int and nep-tra
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:1708

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