Blyde, Juan, Kugler, Maurice and Stein, Ernesto
Exporting vs outsourcing by MNC subsidiaries: which determines FDI spillovers?
In, European Trade Study Group (ETSG) 2004, Nottingham, UK,
09 - 11 Sep 2004.
Full text not available from this repository.
Export orientation of multinational corporations (MNCs) has seldom been
incorporated in the analysis of spillovers from foreign direct investment (FDI).
Also, until recently empirical research dealt mainly with intra-industry spillovers
from FDI with restrictive treatment of inter-industry effects. Yet, to the extent
that local producers are not in the competitive fringe of MNCs, both
spillovers from export oriented subsidiaries and inter-industry spillovers may
be more likely. First, when MNCs use the host country as export platform,
domestic firms are by and large not competitors to subsidaries. Then, there
would be no incentives to restrict technical information flows. Our results using
panel data from Venezuelan manufacturing point to FDI spillovers, mainly between
but also within industries, from export-oriented MNCs to large domestic
firms. Second, MNCs that outsource have an incentive to transfer technical
knowledge to local upstream suppliers. When we allow for spillovers to take
place across sectors, we find evidence that backward linkages are a channel of
technology diffusion from export-oriented MNCs to domestic manufacturers.
Furthermore, small and medium plants do not experience productivity gains
ensuing FDI while large domestic producers experience higher productivity
growth, suggesting the importance of differences in absorptive capacity.
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