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 spillovers1can 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 Using unpublished economic census data from Mexico’s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 comparinginterindustry
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
V. N. Balasubramanyam, M. Salisu and D. Sapsford, “Foreign Direct Investment and Growth in EP and IS Countries,” The Economic Journal, Vol. 106, No. 434, 1996, pp. 92-105. http://dx.doi.org/10.2307/2234933
M. Blomstrom, S. Globerman and A. Kokko, “The Determinants of Host Country Spillovers from Foreign Direct Investment: Review and Synthesis of the Literature,” In: N. Pain, Ed., Inward Investment, Technological Change and Growth, Palgrave, London, 2001, pp. 34-66.
F. Reganati and E. Sica, “Horizontal and Vertical Spillovers from FDI: Evidence from Panel Data for the Italian Manufacturing Sector,” Journal of Business Economics and Management, Vol. 8, No. 4, 2007, pp. 259-266.
G. Hanson, R. Mataloni and M. Slaughter, “Vertical Production Networks in Multinational Firms,” The Review of Economics and Statistics, Vol. 87, No. 4, 2005, pp. 664678. http://dx.doi.org/10.1162/003465305775098080
W. Chung, W. Mitchell and B. Yeung, “Foreign Direct Investment and Host Country Productivity: The American Automotive Component Industry in the 1980s,” Journal of International Business Studies, Vol. 34, No. 2, 2003, pp. 199-218. http://dx.doi.org/10.1057/palgrave.jibs.8400017
X. Martin, W. Mitchell and A. Swaminathan, “Recreating and Extending Japanese Automobile Buyer-Supplier Links in North America,” Strategic Management Journal, Vol. 16, No. 8, 1995, pp. 589-619. http://dx.doi.org/10.1002/smj.4250160803
G. Blalock and P. J. Gertler, “Welfare Gains from Foreign Direct Investment through Technology Transfer to Local Suppliers,” Journal of International Economics, Vol. 74, No. 2, 2008, pp. 402-421. http://dx.doi.org/10.1016/j.jinteco.2007.05.011
B. Javorcik, “Does Foreign Direct Investment Increase the Productivity of Local Firms? In Search of Spillovers through Backward Linkages,” American Economic Review, Vol. 94, No. 3, 2004, pp. 605-627. http://dx.doi.org/10.1257/0002828041464605
B. Javorcik, K. Saggi and M. Spatareanu, “Does It Matter Where You Come From? Vertical Spillovers from Foreign Direct Investment and the Nationality of Investors,” World Bank Policy Research Working Paper No. 3449, 2004.
L. Du, A. Harrison and G. H. Jefferson, “Testing for Horizontal and Vertical Foreign Investment Spillovers in China, 1998-2007,” Journal of Asian Economics, Vol. 23, No. 3, 2012, pp. 234-243. http://dx.doi.org/10.1016/j.asieco.2011.01.001
S. Bwalya, “Foreign Direct Investment and Technology Spillovers: Evidence from Panel Data Analysis of Manufacturing Firms in Zambia,” Journal of Development Economics, Vol. 81, No. 2, 2006, pp. 514-526. http://dx.doi.org/10.1016/j.jdeveco.2005.06.011
R. López and J. Südekum, “Vertical Industry Relations, Spillovers, and Productivity: Evidence from Chilean Plants,” Journal of Regional Science, Vol. 49, No. 2, 2009, pp. 721-747. http://dx.doi.org/10.1111/j.1467-9787.2009.00631.x
J. A. Jordaan, “Intraand Inter-Industry Externalities from Foreign Direct Investment in the Mexican Manufacturing Sector: New Evidence from Mexican Regions,” World Development, Vol. 36, No. 12, 2008, pp. 28382854. http://dx.doi.org/10.1016/j.worlddev.2008.02.006
K. Yudaeva, K. Kozlov, N. Melentieva and N. Ponomareva, “Does Foreign Ownership Matter? The Russian Experience,” Economics of Transition, Vol. 11, No. 3, 2003, pp. 383-409. http://dx.doi.org/10.1111/1468-0351.00157
S. Rosenthal and W. Strange, “Evidence of the Nature and Sources of Agglomeration Economies,” In: V. J. Henderson and J. F. Thisse, Eds., Handbook of Urban and Regional Economics, Vol. 4, North Holland, Amsterdam, 2004.
J. Levinsohn and A. Petrin, “Estimating Production Functions Using Inputs to Control for Unobservables,” Review of Economic Studies, Vol. 70, No. 2, 2003, pp. 317-342. http://dx.doi.org/10.1111/1467-937X.00246