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Distance, time since foreign entry, and productivity spillovers from foreign direct investment
Author(s) -
Merlevede Bruno,
Purice Victoria
Publication year - 2016
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12159
Subject(s) - spillover effect , foreign direct investment , productivity , competitor analysis , business , international economics , monetary economics , international trade , economics , marketing , microeconomics , macroeconomics
This paper investigates the effect of foreign direct investment on the productivity of local manufacturing firms in Romania. We decompose traditional country‐wide spillover measures in different components according to both proximity between foreign and domestic firms and time‐since‐foreign‐entry. We find larger and faster spillover effects for local suppliers of foreign firms at shorter distance, driven mainly by recent foreign entrants. Irrespective of distance, foreign firms of medium maturity generate backward spillover effects that fade away with longer presence. A positive effect on local competitors is not significantly affected by distance, but requires the presence of mature foreign firms.