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Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects

Christian Fons-Rosen (), Sebnem Kalemli-Ozcan (), Bent Sorensen, Carolina Villegas-Sanchez () and Vadym Volosovych ()
Additional contact information
Sebnem Kalemli-Ozcan: University of Maryland, CEPR, and NBER, the USA

No 17-078/IV, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We study the impact of FDI on the productivity of host-country firms. FDI has positive spillovers only when foreign and domestic firms use similar technologies. Channeling FDI to sectors where firms share similar technology would significantly increase productivity spillovers from FDI. We show that inventor mobility across sectors is a key channel of technology transfer. To deal with endogeneity concerns we control for sectoral productivity growth, construct a Bartik-style instrument based on the productivity growth of neighboring countries, and exploit differences in knowledge flows across sectors captured by an asymmetric patent citation matrix.

Keywords: Multinationals; Competition; Technology; Selection; FDI; TFP (search for similar items in EconPapers)
JEL-codes: E32 F15 F36 O16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-eff, nep-knm, nep-mac and nep-tid
Date: 2017-09-05, Revised 2018-10-01
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https://papers.tinbergen.nl/17078.pdf (application/pdf)

Related works:
Working Paper: Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects (2017) Downloads
Working Paper: Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects (2017) Downloads
Working Paper: Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects (2017) Downloads
Working Paper: Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects (2017) Downloads
Working Paper: Foreign Investment and Domestic Productivity: Identifying knowledge spillovers and competition effects (2017) Downloads
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