Kiel Working Papers, Kiel Institute for World Economics
No 1248:
Foreign Direct Investment, Spillovers and Absorptive Capacity: Evidence from Quantile Regressions
Sourafel Girma and Holger Görg
Abstract: This paper focuses on the role of absorptive capacity in
determining whether or not domestic firms benefit from productivity
spillovers from FDI using establishment level data for the UK. We allow for
different effects of FDI on establishments located at different quantiles
of the productivity distribution by using conditional quantile regression.
Overall, while there is some heterogeneity in results across sectors and
quantiles, our findings clearly suggest that absorptive capacity matters
for productivity spillover benefits. We find evidence for a u-shaped
relationship between productivity growth and FDI interacted with absorptive
capacity. We also analyse in some detail the impact of changes in
absorptive capacity on establishments’ ability to benefit from
spillovers.
Keywords: foreign direct investment, absorptive capacity, productivity spillovers, quantile regressions; (follow links to similar papers)
JEL-Codes: F21,; F23; (follow links to similar papers)
23 pages, May 2005
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