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.     

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.     

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.     

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.     

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.     

Foreign Direct Investment Spillovers and Productivity Growth in Indonesian Garment and Electronics Manufacturing

Inflows of foreign direct investment generate externalities that spill over to domestic firms and raise their productivity. This article examines the extent of spillover effects of foreign direct investment for firms in the highly disaggregated garment (ISIC 3221) and electronics industries (ISIC 3832) in Indonesia. Both are export-intensive industries, but differ greatly in technological sophistication and labour intensity. Changes in both the productivity level and rate of growth in each industry are decomposed into the effects of technological change, technical efficiency change and scale efficiency change and then the impacts of spillovers on each component and on total productivity are estimated. The findings suggest that foreign direct investment generates a positive effect on total productivity change, technical efficiency change, technological change, and scale efficiency change in the garment industry. In contrast, foreign direct investment contributes significantly negatively to total productivity, technological change and scale efficiency change, but has no significant effect on technical efficiency change in the electronics industry.     

An interpretation of argentine economic growth since 1930∗Part I

This study uses pairing of Mexican‐owned manufacturing firms and firms with direct United States investment, to examine the effects of ownership structure on firms’ performance and sources of technology. Results suggest that in terms of profitability, growth and export performance the Mexican firms were competing successfully during the period 1966–73. Furthermore, the basis for this strong posture by the Mexican manufacturers was not due to a heavy reliance on foreign technology imported through formal channels, but rather is linked with internal innovative activity and the use of domestic consultants.     

Minority entrepreneurs and firm performance in sub‐Saharan Africa

This study focuses on the role of entrepreneurs in the private sector in sub‐Saharan Africa. Using data from the Regional Program on Enterprise Development (RPED) and controlling for various factors, our analysis compares growth rates of indigenously owned African firms with firms owned by entrepreneurs of Asian or European descent, in Kenya, Zambia, Zimbabwe, and Tanzania. We find that after controlling for firm size and age, various entrepreneurial characteristics, and sector and country differences, minority (or non‐indigenous) entrepreneur firms start out larger and grow significantly faster than indigenously‐owned African firms. Our results are consistent with theories that argue that informational and financial networks created by minority entrepreneurs provide access to credit, information, and technology for members of these networks. We also find that within indigenously‐owned African firms, entrepreneurs with secondary and/or university education realise a higher rate of growth; access to education presumably enables indigenous African entrepreneurs to develop managerial skills that serve as a substitute for the informational and financial networks created by minority entrepreneurs.     

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.     

Productivity performance and priorities for the reform of China's state‐owned enterprises

This study reports on the results of a survey of 300 state‐owned, collective and foreign‐funded industrial enterprises conducted in three of China's coastal provinces; Guangdong, Fujian and Shanghai‐shi in 1993.’ Its major focus and policy relevance is to identify which of China's recent enterprise, market and ownership reforms have been most effective in improving the productivity performance of China's state owned enterprises. The study concludes that productivity growth (measured by total factor productivity) has been significantly higher for non‐state‐owned than for state‐owned enterprises and for firms located in the special economic zones of Shenzhen and Xiamen and the open city of Guangzhou than for firms in the more centrally planned Shanghai. Export‐orientated enterprises also had higher total factor productivity growth than non‐export‐orientated ones. At a lower level of significance, enterprises that controlled their own decision‐making produced a lower proportion of output for the plan, procured a higher proportion of their investment finance from loans (rather than budgetary allocations) and achieved higher total factor productivity growth. Finally, labour‐intensive industries in general had higher total factor productivity growth than did capital‐intensive ones. A number of policy conclusions may be drawn from these results.     

Accumulating Technology and Location Spillovers Among Firms in Taiwan's Electronics Industry

Using firm-level panel data from the Taiwanese Census of Manufactures for 1986 and 1991 in the context of a modified selection model, we focus on three activities that contribute to the productivity growth of firms in the electronics industry: research and development, direct foreign investment and exports. In particular we address the issue of whether, in addition to the direct benefits of these activities, there are spillovers to other firms within the same four-digit industry or within the same geographical county. Our empirical results indicate that while the survival and direct productivity growth effects of R&D, exports and DFI are positive and statistically significant, intra-industry and geographical spillover effects are consistently present only for the export activity. That is, a firm's expected future TFP is positively and significantly affected by being located in a county and industry with more export activity. In addition, there is some evidence that the indirect effects generated by DFI firms, in the form of location spillover benefits to other firms, are also positive and significant. Finally, the empirical results indicate that the above direct and indirect benefits of the technological activities under study accrue principally to Taiwan's small and medium enterprises, rather than its large firms.     

On the apparent benefits of higher productivity: An arithmetical illustration a comment

During the 1980s, like many other developing countries Nepal attempted actively to attract direct foreign investment. This article reports the results of a survey of the foreign‐owned firms in operation at the end of the 1980s. The motives of firms for their investment decisions in Nepal are summarised. The impact of foreign investment is assessed quantitatively using both financial and economic cost‐benefit criteria. In general, it appears that foreign investment has been beneficial to both the foreign investors and the national economy. Foreign investors from India have played a particularly important role. However, much of the national returns from foreign investment is derived from the payment of taxes, so that an excessively generous policy of tax incentives may not maximise national returns.     

Imports of Intermediate Inputs and Spillover Effects: Evidence from Chilean Plants

This paper uses plant-level data from Chile to examine the determinants of importing intermediate inputs paying special attention to the role of importing spillovers. The results show that plants that pay higher wages and plants with previous experience importing intermediate inputs are more likely to import inputs. This study also finds a positive correlation between the number of importers in the same region, regardless of their industry affiliation, and the probability of importing intermediate inputs. This suggests that importing spillovers may be important, at least in the case of Chilean manufacturing.     

Tansnationals and foreign trade: Evidence from Brazil

A recursive model of exports and imports of manufactures, in which imports depend in part on exports, is estimated using data for a cross‐section of 17,053 industrial firms. In this sample, 652 firms are foreign‐owned. Explanatory variables include firm size, skill intensity, advertising and other variables in addition to foreign ownership. Foreign ownership has a large, independent effect on both export performance and import propensities, but foreign ownership in itself explains little of the relatively low export/import ratios registered by affiliates of transnationals.     

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.     

The macro impacts of Korea's Heavy industry drive re‐evaluated

The Korean heavy industry (HCI) drive has been criticised for the misallocation of capital and for negative spillover effects on growth, inflation, the current account and debt. However, such criticism places too much blame on HCI for the late ‐ 1970s' economic deterioration and gives HCI insufficient credit for the subsequent economic rebound. Korean HCI was a catch‐up exercise which attracted cheap foreign capital to accelerate structural change. Nevertheless, the mid‐1970s' decision to pursue HCI as a Big Push was flawed since it did result in project bunching that strained implementation capacity, despite the safeguards which Korea built into its HCI strategy.     

HYBRIDS AND PROFESSIONAL COMMUNITIES: COMPARING UK REFORMS IN HEALTHCARE,BROADCASTING AND POSTAL SERVICES

Many countries use state‐owned, for‐profit, and third sector organizations to provide public services, generating ‘hybrid’ organizational forms. This article examines how the hybridization of organizations in the public sector is influenced by interaction between regulatory change and professional communities. It presents qualitative data on three areas of the UK public sector that have undergone marketization: healthcare, broadcasting, and postal services. Implementation of market‐based reform in public sector organizations is shaped by sector‐specific differences in professional communities, as these groups interact with reform processes. Sectoral differences in communities include their power to influence reform, their persistence despite reform, and their alignment with the direction of change or innovation. Equally, the dynamics of professional communities can be affected by reform. Policymakers need to take account of the ways that implementation of hybrid forms interacts with professional communities, including risk of disrupting existing relationships based on communities that contribute to learning.     

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.     

FDI and the Dynamics of Productivity in Indonesian Manufacturing

This article examines productivity growth in the Indonesian manufacturing sector. We use a longitudinal data set to calculate the effects on aggregate manufacturing productivity growth from improvements within establishments, from reallocation of market shares, and from the turnover of plants. Productivity growth is mainly explained by reallocation of market shares and from turnover of plants. Moreover, the foreign contribution to productivity growth is unclear and depends on the choice of productivity measure. A cautious conclusion is that the foreign contribution is about the same size as the foreign share of manufacturing output. Finally, there is a difference in the causes of productivity growth between foreign and domestic plants.     

Exchange rate variations and export competitiveness in less developed countries under generalized floating

This paper identifies two basic sources of effective exhange rate (EER) changes under the present system of generalized currency floating and formulates some EER‐based measures of relative export competitiveness in developing countries. These measures are presented and analyzed in terms of their monthly movements and trends over the period from March 1973 to December 1979 for twenty‐three developing countries. Export profitability vis‐à‐vis import‐competing production is shown to have been affected by major currency realignments only to a moderate extent. Normal currency depreciation, both small and large, is found not to lead necessarily to a permanent improvement in export competitiveness. The relationship between the type of exchange rate management and ability of the national authorities to adopt monetary and fiscal policies supportive of real exchange rate adjustment is also empirically examined.