Abstract
Foreign direct investment (FDI) from Multinational enterprises (MNEs) can augment the productivity of domestic firms insofar as knowledge ?spills over? from foreign investors to local producers. The capacity of local companies to exploit knowledge from MNEs can be affected by the technology gap between foreign and local enterprises at both horizontal (in the same industry) and vertical (in different industries) level. Whereas most of the empirical literature has focused exclusively on the analysis of horizontal and backward spillovers (i.e. between MNEs and local suppliers), the present paper also examines the relationship between FDI-related spillovers and technological gap in the Italian manufacturing sector at forward level (i.e. between MNEs and local buyers). Results suggest that at both intra-industry and forward level, the technological gap is of considerable importance for the spillover effect, particularly in the case of low-medium gap.
Highlights
It is well known in the literature that Foreign direct investment (FDI) from Multinational enterprises (MNEs) can augment the productivity of domestic firms insofar as knowledge “spills over” from foreign investors to local producers
The present paper contributes to explore such void in the existing literature by examining the impact exerted by technological gap upon inward-FDI spillovers at forward level
Column (i) shows results for the whole sample, whereas columns (ii), (iii) and (iv) provide estimations by distinguishing domestic firms according to the level of technological gap
Summary
It is well known in the literature that Foreign direct investment (FDI) from Multinational enterprises (MNEs) can augment the productivity of domestic firms insofar as knowledge “spills over” from foreign investors to local producers Empirical literature has so far focused essentially upon the relationship between inwardFDI spillovers and technological gap at horizontal level (i.e. in the same industry) and at backward level (i.e. between MNEs and local suppliers), disregarding the possibility that FDI spillover can be affected by the technological gap between MNEs and local buyers (forward spillovers). In this framework, the present paper contributes to explore such void in the existing literature by examining the impact exerted by technological gap upon inward-FDI spillovers at forward level. Was affected in the last years by a sustained flow
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