To Share or Not to Share: Does Local Participation Matter for Spillovers from Foreign Direct Investment?

By B. Javorcik, Mariana Spatareanu. 2003

574 citations recorded by the source corpus.

This paper examines whether the degree of spillovers from foreign direct investment is affected by the foreign ownership share in investment projects. The analysis, based on an unbalanced panel of Romanian firms from 1998-2000, provides evidence consistent with positive intra-sectoral spillovers resulting from fully-owned foreign affiliates but not from projects with joint domestic and foreign ownership. This finding is consistent with literature suggesting that foreign investors tend to put more resources into technology transfer to their wholly-owned projects than to those owned partially. The data also indicate that the presence of partially foreign-owned projects is correlated with higher productivity of domestic firms in upstream industries, suggesting that domestic suppliers benefit from contacts with multinational customers. But the opposite is true for fully-owned foreign affiliates, which appear to have a negative effect on domestic firms in upstream industries. These results are consistent with the observation that foreign investors entering a host country through greenfield projects are less likely to source locally than those engaged in joint ventures or partial acquisitions. They are also in line with the evidence suggesting that fully-owned foreign subsidiaries use newer or more sophisticated technologies than jointly-owned investment projects, and thus may have higher requirements which only a few, if any, domestic suppliers are able to meet.

Subfields: Accounting, Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/ad6186cf4c0e9ca1fd0765c023ded8cab0ff5fb6

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Citations in the corpus

Exporting, linkages and productivity spillovers from foreign direct investment (2008, background): “For example, Javorcik and Spatareanu (2007) find that there are positive horizontal spillovers from fully-owned foreign affiliates but not from partially-owned affiliates in their firm level data for Romania.”
Foreign multinationals and domestic innovation: Intra-industry effects and firm heterogeneity (2015, background): “Firms operating in different vertically connected industrial sectors are more likely to benefit from positive externalities (Ernst and Kim, 2002; Javorcik, 2004; Crespo and Fontoura, 2007; Javorcik and Spatareanu, 2008 and 2009; Blalock and Gertler, 2008).”
FDI Spillovers and Time Since Foreign Entry (2014, unknown): “With respect to backward spillovers, Javorcik and Spatareanu (2008) find positive effects mainly for spillovers from joint ventures.”
FOREIGN DIRECT INVESTMENT AND URBAN CONCENTRATIONS: UNBUNDLING SPATIAL LAGS a (2009, unknown): “Javorcik and Spatareanu (2008) arrive at similar conclusions about vertical spillover effects with Romanian firm-level data.”
Teaching locals new tricks: Foreign experts as a channel of knowledge transfers (2007, unknown): “Empirical work in search of spillovers to local firms include Haddad and Harrison (1993), Aiken and Harrison and Lipsey (1996), Blomström and Kokko (1998), Blomström and Sjöholm (1999), Aitken and Harrison (1999), Blalock (2002), Javorcik and Spatareanu (2003) and Javorcik (2004).”
Determinant Factors of FDI Spillovers – What Do We Really Know? (2007, methodology): “Using data for Uruguay, Kokko et al. (1996) distinguish between domestic establishments with low and high technological gaps vis-à-vis MNEs operating in the same sector and obtain evidence of positive spillovers only in the first group. The same result emerges from the studies of Cantwell (1989), Ts”
The Impact of Horizontal and Vertical FDI on Host's Country Economic Growth (2008, unknown): “Most of these studies are conducted at the microeconomic level, and include Blomstro¨ m (1986) and Kokko (1994) for Mexico, Blomstrom, Kokko, and Zejan (1994) for Uruguay, Aitken and Harrison (1999) for Venezuela, Sjo¨ holm (1999) for Indonesia, Javorcik (2004) for Lithuania and Javorcik and Spatar”