Local technological capability and productivity spillovers from FDI in the Uruguayan manufacturing sector

This article examines intra‐industry spillovers from FDI in Uruguayan manufacturing plants in 1988, to determine whether differences in the technology gap between locally‐owned plants and foreign affiliates have any impact on the relation between local productivity and foreign presence. We find a positive and statistically significant spillover effect only in a sub‐sample of locally‐owned plants with moderate technology gaps vis‐à‐vis foreign firms. Our interpretation is that there are firm‐specific differences in the ability to absorb spillovers, and that these may explain some of the contradictory findings of earlier spillover studies.     

Missing Links: Foreign Investment and Industrial Development in Costa Rica and Mexico

This article offers an analytical framework for understanding the missing links between FDI and development, and applies it to the high technology sectors of Costa Rica and Mexico, the two countries in Latin America that have attracted the highest percentage of FDI in manufacturing. Since the advancement of knowledge-based assets in this sector is at the heart of structural change and development, we focus specifically on the conditions that enable or prevent positive knowledge spillovers from FDI. We identify two main reasons for the missing links between high-tech FDI and the development of indigenous knowledge-based assets in Costa Rica and Mexico. First, their governments did not have a coherent strategy, which would have spelled out the needed government policies to advance national capabilities, overcome market failures, and support the integration of national producers into TNCs’ global production networks. Second, there were limitations on the spillover potential from FDI. In Costa Rica and Mexico, technology or scale requirements for inputs made it difficult for large TNCs to source domestically beyond simple inputs like packaging materials. In Mexico, fundamental changes in the organization of global production chains in the computer industry led TNCs to rely on their global contract manufacturers rather than work with potential Mexican input suppliers.     

Spatial Spillover Effects from Foreign Direct Investment in Vietnam

This paper investigates the role of inter-firm interaction and geographical proximity in the determination of productivity spillover effects from foreign to domestic firms. We developed an estimation approach using the Spatial Durbin model and applied this to a firm-level dataset from Vietnam from 2000–2005. We found that productivity spillovers diminished when the distance between foreign and domestic firms increases and that interactions among local firms amplify the spillovers. Within short distances, the presence of foreign firms creates positive backward, negative forward and horizontal spillovers. Based on the findings, several implications are extracted regarding promotion policy for foreign direct investment in developing countries.     

International Trade,R&D Spillovers and Productivity: Evidence from Indian Manufacturing Industry

This paper examines the effect of trade facilitated R&D spillovers on the productivity of manufacturing firms in India, inter-sectoral variation in the effect on productivity and the importance of firms' investment in R&D, technology imports and plant and machinery in enhancing the productivity effect. Using firm level panel data, the study shows that R&D spillovers have a significant effect on productivity and that this effect is greater in technology-intensive industries. The paper also shows that firms' investment in plant and machinery enhances the productivity effect of R&D spillovers. The paper provides detailed micro-level evidence on the argument that trade openness promotes technological progress in developing countries.     

Social Interactions and Spillover Effects in Chinese Family Farming

This paper aims to test the effects of social interaction and input spillovers on the agricultural performance of family farms in mixed paddy rice production (organic and conventional farming). Using survey panel data from a Chinese village, we adopt a Spatial Durbin Model (SDM) derived from spatial econometrics to disentangle the social interaction effect from spillover effects and to control for technological heterogeneities. Our analysis reveals a negative social interaction effect indicating that an increase in the yield of neighbouring plots leads to a decrease in the yield of the plot itself. We also find input spillovers. Labour, capital costs, water and organic pesticides have positive spillovers while external nutrients (nitrogen and phosphate) have negative spillover effects. Our study thus calls for a better understanding of social interactions and spillover effects among farmers in the promotion of sustainable family farming.     

The Truth about Trade: The Real Impact of Liberalisation

The usual perspective on technology spillovers from FDI sees the MNC subsidiary as a passive actor. It presumes that the technological superiority that spreads from subsidiaries to other firms in the host economy is initially created outside it by MNC parent companies, and is delivered to subsidiaries via international technology transfer. The role of subsidiaries is little more than to act as a ‘leaky container’ lying between the technology transfer pipeline and the absorption of spillovers by domestic firms. This paper suggests a different model in which a substantial part of the potential for spillover is created within local subsidiaries as a result of their own knowledge-creating and accumulating activities in the host economy. We explore empirically the effects of these activities on technology spillovers from FDI using data for industrial firms in Argentina over the period 1992–96. The analysis suggests that significant results can be obtained incorporating subsidiaries' own technological activities as an explanatory variable of the spillover process.     

Tariffs and Firm Performance in Ethiopia

We use data on Ethiopian manufacturing firms and commodity-level data on tariffs to examine the effects of trade liberalisation on firm performance. We distinguish the productivity gains that arise from reducing final goods tariffs from those that arise from reducing tariffs on intermediate inputs. We find no evidence that output tariff reduction improves productivity, but we find large positive effects of input tariff reductions. These are robust to alternative productivity measures, treating tariffs as endogenous, and various generalisations of the model. We conclude that policy measures designed to facilitate access to inputs produced abroad may lead to productivity gains.     

Inter-industry Productivity Spillovers: An Analysis Using the 1989–1998 Brazilian Trade Liberalisation

Abstract

A major obstacle in the estimation of inter-industry (vertical) productivity spillovers is the need of an exogenous productivity shock. In this article, I propose the use of trade policy changes as a large productivity shock, since the literature has found evidence that trade liberalisations increase industry-level productivity. To do so, I develop a new empirical methodology using spatial econometrics, and apply it to the large economy-wide shock represented by the 1989–1998 Brazilian trade liberalisation. My results indicate the existence of positive and substantial upstream productivity spillovers. Nevertheless, no evidence of downstream productivity spillovers is found.     

Are Tax Havens Good Neighbours? FDI Spillovers and Developing Countries

Abstract

This paper investigates the impact of tax havens on non-tax haven countries in terms of foreign direct investment (FDI). We analyze the importance of agglomeration effects by including FDI inflow levels in tax havens and capture geographic spillovers by measuring proximity to the nearest tax haven. Our analysis yields several interesting findings. First, using panel data for 142 countries, we find evidence of positive spillovers from tax havens to nearby developing countries, but not to nearby developed countries. Second, restricting our panel to developing countries, we find the positive effect of tax haven FDI on developing countries to be robust. Third, we find that geographic distance matters for financial flows: developing countries which are the closest to a nearby tax haven benefit the most in terms of FDI inflows. This result is robust to accounting for spatial interdependence of FDI.     

Income,ouput and employment linkages and import intensities of manufacturing industries in India

The major thrust of planned development in India has been on employment and income generation and self‐reliance. The study evaluates ex‐post income, output and employment linkages and import intensities of manufacturing sectors using an input‐output model. It shows that among the four broad groups of industries, namely agrobased, non‐agrobased final goods, intermediate and capital goods, agrobased industries through technological interdependence, particularly backward linkages, generate relatively more income and employment and use less imported inputs. The non‐agrobased final goods industries with larger import requirements provide potential for income and employment generation if their required imported inputs are internalised.     

Learning and Behavioural Spillovers of Nutritional Information

This paper provides evidence for informational spillovers within urban slums in Chandigarh, India. I identify three groups, a treatment group, a neighbouring spillover group, and a non-adjacent pure control group. Mothers of children (aged three to six years) enrolled in government day-care centres are given recipe books in the treatment group to reduce malnutrition in their children. Spillovers to neighbouring (untreated) mothers can be through social learning or imitation. Results from a difference-in-differences analysis show that nutritional knowledge measured through a quiz increases among neighbouring untreated mothers relative to a control group. Neighbouring mothers exhibit learning spillovers, changes in dietary behaviour and a reduction in food expenditure regardless of their level of literacy. Spillovers not only raise the cost effectiveness of health information programmes but are important to consider when designing an experiment as causal effects of treatments can be attenuated if the spillover group is used as a control group.     

How (Un)Even was the Distribution of the Impacts of Mali's Water Privatisation across Stakeholders?

This article evaluates quantitatively the welfare effects and their distribution among key stakeholders of Mali's brief water privatisation experience. To do so, we estimate economic worth generation and its drivers from a new use of indicator duality and production theory. We find that: (i) most users, intermediate suppliers, investors and workers benefited; (ii) poor rural users gained much less and taxpayers lost, moreover, (iii) foreign workers and investors benefited much more than locals, (iv) the firm's owners captured a large share of the rent they helped create, probably through transfer pricing as they controlled cost data for key intermediate inputs.     

Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers

In this article we conduct a large quantitative survey of the literature on horizontal and vertical spillovers from foreign direct investment (FDI). We create a unique database of spillover estimates for each country examined in the literature. Next, we estimate the average effect corrected for publication selection bias (the preferential selection of positive and significant estimates for publication). Our results suggest that an average reported estimate of backward spillovers is statistically significant. Publication selection is evident only among studies published in peer-reviewed journals, and only among the estimates that authors consider most important. Authors with small data sets engage in more publication selection. The intensity of selection in the literature decreases over time, which supports the economics-research-cycle hypothesis.     

Trade creation,trade diversion and effective protection in the central American common market

Aggregate analyses suggest that the formation of the Central American Common Market (CACM) has resulted in little or no trade diversion, but different conclusions apply when the import data are appropriately disaggregated. Increases in the effective rates of protection for consumer goods have led to increased demand for extra‐regional imports of intermediate inputs and decreased demand for extra‐regional imports of final goods. On balance, the CACM is a trade‐diverting customs union for non‐durable consumer goods: trade‐creating effects are present in Honduras and Costa Rica, but trade‐diverting effects dominate in Guatemala, El Salvador and Nicaragua.     

Technology Trade

This study addresses the question of why some countries import more research and development-intensive goods than others. Using a panel data set of 80 countries for the period 1970–1995, results indicate that domestic investment, foreign direct investment and the quality of intellectual property rights systems positively affect technology imports. However, the higher the percentage of the workforce with primary studies, the lower technology imports are. Moreover, intellectual property rights tend to reinforce the positive role played by foreign direct investments in importing technology while the ability of imitation reduces the effect of intellectual property rights.     

The environment – Energy security nexus: critical analysis of an energy ‘love triangle’ in Southeast Asia

The mantra of energy security is regularly employed as an excuse for governing elites in the less affluent South to pursue large-scale energy projects that are often inappropriate and unnecessary for local development needs. This situation is exemplified in Thailand, Burma and Laos. Here the dominant classes have created an energy ‘love triangle’, whereby Thailand exports the many problems associated with cross-border energy projects to its more authoritarian neighbours while importing the resultant energy. This article employs critical security literature and the concept of earth rights to investigate these relationships and elucidate resultant linkages between environmental and energy security. It finds that, far from safeguarding local communities from depravation, these projects often exacerbate existing social tensions and conflict, hastening environmental degradation and intensifying various manifestations of insecurity.     

Inter-municipal cooperation in the case of spillovers: evidence from Western German municipalities

ABSTRACT

This paper examines the question: Does the existence of regional spillovers have an impact on the emergence of inter-municipal cooperation (IMC) in tourism marketing? We use data from a survey conducted among Western German municipalities merged with official statistics regarding municipalities’ fiscal, political and demographic situation, as well as tourism-related characteristics. We are the first to apply a hazard model explaining the emergence of IMC. This method has serious advantages over the previously used methods. Surprisingly, our results show that especially municipalities with the opportunity to free ride start IMC more likely than municipalities without this opportunity. Apparently, under certain circumstances, municipalities are better off starting IMC than free riding.     

Observing FDI spillover transmission channels: evidence from firms in Uganda

Abstract

We observe and analyse three intra-industry foreign direct investment (FDI) spillover transmission channels using unique firm-level data collected from on-site interviews and observations regarding domestic and foreign firms operating in Uganda in 2015. Our main results are: (1) the spillover effects mainly depend on the channel(s) by which they occur (the competition channel is most important while spillover benefits through the worker mobility and the imitation channels are less prevalent) and (2) both positive and negative spillover effects occur within the same channel and, moreover, effects differ by channel for the same case. These are novel and challenging findings that have not yet been recognised in theoretical and empirical research on FDI spillovers. Our results suggest that long-term pecuniary spillover effects are predominantly stimulated via the competition channel and show that only limited short-term and long-term technological spillover effects occur through the imitation and the movement of workers channels. These channels are not only less prevalent, but also appear to be constrained by competition-determined spillovers. We are confident that these directions for future research will have a high pay-off because, as shown by this exploratory fieldwork, a more complete picture of the spillover effects is reached when the channels are considered simultaneously.     

Evaluating the Impact of Public Student Subsidies on Low-Cost Private Schools in Pakistan

This paper examines the impacts of accountability-based public per-student subsidies provided to low-cost private schools in Punjab, Pakistan on student enrolment and school inputs. Programme entry is contingent on achieving a minimum pass rate on a specially-designed academic test. We use regression discontinuity to estimate impacts on schools that joined the programme in the last entry round (phase 4) before follow-up survey data collection. We find large positive impacts on school enrolment, number of teachers, and other inputs for programme schools near the minimum pass rate.     

EU–Russian Relations and Turkey's Role as an Energy Corridor

This article analyses the impact of EU–Russian relations on Turkey's role as a corridor for the transit of energy supplies to Europe. While the European Union (EU) has inherent leverage in its collective purchase of most Russian gas exports, market power has shifted in Russia's favour. Russian efforts to build new pipelines and widen downstream access have stimulated EU interest in diversifying energy imports and transit routes. In this sense, the EU has recognised Turkey's potential value as a secure and independent route for importing non-Russian energy supplies, which may in turn have an impact on Turkey's EU accession process.