Kiel Working Papers, Kiel Institute for World Economics
No 1482:
The role of production technology for productivity spillovers from multinationals: Firm-level evidence for Hungary
Holger Görg, Alexander Hijzen and Balazs Muraközy
Abstract: This paper analyses the potential for productivity
spillovers from inward foreign direct investment using administrative panel
data on firms for Hungary. We hypothesise that the potential for spillovers
is related to observable characteristics of the production process of
foreign affiliates, and evaluate this empirically. We further explore the
role of competition in explaining productivity spillovers within
industries. Our empirical analysis yields a number of important findings.
First, we show that the potential for spillovers is importantly related to
the production technology of the sectors and foreign affiliates. Firms that
relocate labour-intensive activities to Hungary to exploit differences in
labour costs are unlikely to generate productivity spillovers, while
spillovers increase in the capital intensity of foreign affiliates. Second,
we find that spillovers differ markedly in the early and later stages of
transition, and that there are differences between small and large firms.
Furthermore, foreign presence tends to affect the productivity of domestic
firms negatively whenever MNEs produce for the domestic market
Keywords: foreign direct investment, productivity spillovers, exporting, competition; (follow links to similar papers)
JEL-Codes: F23; (follow links to similar papers)
25 pages, February 2009
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