Foreign Direct Investment and Knowledge Diffusion in Poor Locations
Girum Abebe (),
Margaret McMillan () and
Additional contact information
Michel Serafinelli: University of Essex
No 13422, IZA Discussion Papers from Institute of Labor Economics (IZA)
We use a plant level survey to identify interactions between domestic plants and foreign direct investment (FDI) in Ethiopia's manufacturing sector. One third of Ethiopian plants are linked to FDI through labor sharing, supply chains and competition. Technology upgrading most commonly occurs as a result of competition in output markets and observation and imitation of FDI in the same line of business. Other benefits include enhanced managerial practices and knowledge about exporting. Spillovers from FDI are identified by comparing changes in total factor productivity (TFP) among domestic plants in districts where a large greenfield foreign plant produces 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 domestic plants increases and more domestic plants open.
Keywords: productivity and technology; local economic development; Foreign Direct Investment (search for similar items in EconPapers)
JEL-codes: D24 F21 O18 (search for similar items in EconPapers)
Pages: 54 pages
New Economics Papers: this item is included in nep-int and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Foreign Direct Investment and Knowledge Diffusion in Poor Locations (2019)
Working Paper: Foreign Direct Investment and Knowledge Diffusion in Poor Locations (2018)
Working Paper: Foreign Direct Investment and Knowledge Diffusion in Poor Locations
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp13422
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().