scholarly journals Do Local Firms Benefit from Foreign Direct Investment? An Analysis of Spillover Effects in Developing Countries

2013 ◽  
Vol 9 (4) ◽  
Author(s):  
Stephan Gerschewski
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Spillover Effects ◽  
Local Firms

Vertical and Horizontal Spillovers from Foreign Direct Investment:  Evidence from Malaysian Manufacturing

2017 ◽  
Vol 16 (3) ◽  
pp. 158-183
Author(s):  
Ergun Dogan ◽  
Koi Nyen Wong ◽  
Michael M. C. Yap
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Spillover Effects ◽  
Domestic Firm ◽  
Weak Evidence ◽  
Level Data ◽  
The Cost ◽  
Technology Level ◽  
Human Resource Education ◽  
Local Firms

Given developing countries’ dependence on foreign direct investment (FDI) in manufacturing, it is important to assess the benefits that accompany FDI, given the cost of incentives that are used to attract foreign investments. We empirically analyze FDI spillover effects in Malaysia using unpublished establishment-level data, accounting for domestic firm size, the market orientation of local firms and foreign multinationals, and firm technology level and absorptive capacity. We find weak evidence of horizontal spillovers; backward and forward spillovers are negative in most cases. Because these results raise concerns about the technological capability of local firms, government policies on technology, human resource, education, and R&D should address this.

Foreign Direct Investment and International Technology Diffusion

2019 ◽  
Author(s):  
Difei Geng ◽  
Kamal Saggi
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Technology Diffusion ◽  
Direct Investment ◽  
Multinational Firms ◽  
Industrialized Countries ◽  
Host Countries ◽  
International Technology Diffusion ◽  
International Mergers ◽  
Local Firms

Foreign direct investment (FDI) plays an important role in facilitating the process of international technology diffusion. While FDI among industrialized countries primarily occurs via international mergers and acquisitions (M&As), investment headed to developing countries is more likely to be greenfield in nature; that is, it involves the establishment or expansion of new foreign affiliates by multinational firms. M&As have the potential to yield productivity improvements via changes in management and organization structure of target firms, whereas greenfield FDI leads to transfer of novel technical know-how by initiating the production of new products in host countries as well as by introducing improvements in existing production processes. Given the prominent role that multinational firms play in global research and development (R&D), there is much interest in whether and how technologies transferred by them to their foreign subsidiaries later diffuse more broadly in host economies, thereby potentially generating broad-based productivity gains. Empirical evidence shows that whereas spillovers from FDI to competing local firms are elusive, such is not the case for spillovers to local suppliers and other agents involved in vertical relationships with multinationals. Multinationals have substantially increased their investments in research facilities in various parts of the world and in R&D collaboration with local firms in developing countries, most notably China and India. Such international collaboration in R&D spearheaded by multinational firms has the potential to accelerate global productivity growth.

scholarly journals The effects of foreign direct investment on labour productivity

2018 ◽  
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Labour Productivity ◽  
Government Support ◽  
Economic Sectors ◽  
Vertical Side ◽  
Fdi Inflows ◽  
The Government ◽  
Local Firms

The study of the effects of foreign direct investment (FDI) on the productivity of local firms is aimed at estimating its potential impact in terms of its strengthening activity in developing countries. The article seeks to examine the effects of FDI on labour productivity of local firms and determine the factors that would facilitate the development of more efficient policy to attract FDI to Ukraine. The actual relationship between horizontal and vertical side effects of FDI remains unclear, although the available studies revealed some positive correlations. While recent studies highlight the considerable research efforts made to understand the issues of the investment motivation of the FDI, its impact on economic growth and competitive advantages in developed economies. Empirical studies of FDI effects on domestic firms expose various factors, conditions and characteristics at the national, industry and firm levels. The reported results do not reflect the ambiguous effects of economic sectors on labour productivity, undervalued labour costs per worker, and do not take into account the role of the shadow economy in Central and Eastern European countries. Inadequate skills and education of workers are estimated to be a major or severe obstacle for the operation of multinational companies in many developing countries. The government policy on liberalization of FDI inflows makes local markets more attractive for foreign companies. Government support for education and training is a key factor in attracting FDI. The gains achieved from FDI have prompted the government to encourage FDI inflows. The paper discusses the challenges faced by the government to promote policies for attracting FDI in developing countries.

scholarly journals Labour Productivity Spillovers from Foreign Direct Investment: Evidence from Malaysian Industry Level Panel Data by Labour Skills Composition

2021 ◽  
Vol 6 (6) ◽  
pp. 247-258
Author(s):  
Norhanishah Mohamad Yunus
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Labour Productivity ◽  
Spillover Effects ◽  
The United States ◽  
Knowledge Spillover ◽  
Seemingly Unrelated Regression ◽  
Skilled Workers ◽  
Skill Composition ◽  
Local Firms

This study adds to the literature by examining both technology and knowledge spillover effects of foreign direct investment (FDI) according to skill composition and also by country spillovers in Malaysian medium-high industry, which raises the question of the real benefits produced by both spillovers that Malaysia can reap from the presence of FDI in enhancing the labour productivity. Using the seemingly unrelated regression (SUR) estimator to estimate labour productivity function by skill composition, the results reported that the presence of Japanese, Singaporean and the United States MNCs are statistically significant in influencing the productivity of high and medium-skilled workers from both technology and knowledge spillover effects during the period of 2000 to 2018. Conversely, the analysis indicated that both Chinese and Taiwanese MNCs significantly increase the low-skilled labour productivity. An interesting finding was discovered, that the negative association between knowledge spillovers and labour productivity across the skills draws the attention for the role of local firms as recipients of FDIs depends not only on their absorptive capacity but also on their strategic decisions regarding search direction and motivational disposition to absorb external knowledge. These issues need to be investigated further to understand how local firms may increase their chances of benefitting from MNC presence.

EKREM TATOGLUAND KEITH W. GLAISER, Dimensions of Western Foreign Direct Investment in Turkey (Westport, Conn.: Quorum Books, 2000). Pp. 226. $67.50 cloth.

2001 ◽  
Vol 33 (4) ◽  
pp. 663-665 ◽  
Author(s):  
Asim Erdilek
Keyword(s):  
Developing Countries ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
United Nations ◽  
Multinational Corporation ◽  
Direct Investment ◽  
Foreign Investor ◽  
Managerial Control ◽  
The Past ◽  
The United Nations

The surge in foreign direct investment (FDI)—investment with managerial control by the foreign investor, usually a multinational corporation—has been the major driver of globalization in the past two decades and the accelerator of economic development in many developing countries. It has, however, bypassed Turkey. By all relevant relative measures found in the United Nations' annual World Investment Report, Turkey has failed to attract much FDI.

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