Résumé
This paper analyses the potential for productivity spillovers from inward foreign direct investment using administrative panel data on firms for Hungary. We hypothesise that the potential for spillovers is related to observable characteristics of the production process of foreign affiliates, and evaluate this empirically. We further explore the role of competition in explaining productivity spillovers within industries. Our empirical analysis yields a number of important findings. First, we show that the potential for spillovers is importantly related to the production technology of the sectors and foreign affiliates. Firms that relocate labor-intensive activities to Hungary to exploit differences in labor costs are unlikely to generate productivity spillovers, while spillovers increase in the capital intensity of foreign affiliates. Second, we find that spillovers differ markedly in the early and later stages of transition, and that there are differences between small and large firms. Furthermore, foreign presence tends to affect the productivity of domestic firms negatively whenever MNEs produce for the domestic market. [PUB ABSTRACT]
Voir le contenu complet de ce document
Extrait
The Role of Production Technology for Productivity Spillovers From Multinationals: Firm-Level Evidence for Hungary
1 Introduction
There seems to be a widely held assumption on the part of policy makers that inward foreign direct investment (FDI) brings benefits over and above the additional investment to the host country. In particular, multinational enterprises (MNEs) are seen as being vehicles for inflow of new technology, which may "spill over" to domestic firms and, hence, foster development and assist catching up in less developed economies. Furthermore, MNEs are said to enhance efficiency by introducing higher levels of competition in the economy. Despite these benevolent perceptions towards inward FDI, it is however also possible that domestic firms are forced to decrease their production below the minimum efficient scale, which leads to decreasing productivity. Both arguments may be particularly relevant for transition economies which, after opening up markets, aim at increasing productivity growth and levels of competition in the economy.The possibility of productivity spillovers arises because multinationals may find it difficult to protect a leakage of their "firm specific asset" FSA (Caves 1996), such as superior production technique, know how or management strategy, to other firms in the host country. The public good characteristics imply that once the FSA is out on the external market it can be used by other firms as well, due to it being to some extent non-rival and non-ex...Voir le contenu complet de ce document
Liens sponsorisés
