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Inter-Industry Productivity Spillovers from Japanese and US FDI in Mexico’s Manufacturing Sector

DOI: 10.4236/ti.2013.44028, PP. 236-243

Keywords: Foreign Direct Investment, Productivity Spillovers, Backward Linkages, Forward Linkages, Mexican Manufacturing Sector

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Foreign Direct Investment can have positive effects on host countries by generating spillovers to domestic firms and contributing to increases in their productivity. These productivity spillovers1 can take place within an industry (intraindustry spillovers) and across industries (inter-industry spillovers) as in the case of technology or knowledge transfer to domestic suppliers (backward productivity spillovers) or customers (forward productivity spillovers). Using unpublished economic census data from Mexico’s manufacturing sector this study differs from others by comparing interindustry productivity spillovers from Japanese and US FDI. Results show that Japanese FDI increases the productivity of upstream sectors; however these gains seem to be shared only among foreign suppliers, while US FDI does not seem to generate backward productivity spillovers. Results show no presence of forward productivity spillovers.


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