Do domestic firms benefit from foreign direct investment? Evidence from panel data

About

Countries

Data & Research

Learning

News

Projects & Operations

Publications

Topics

Home > Data & Research > Author Profile > Report Details

Do domestic firms benefit from foreign direct investment? Evidence from panel data, Volume 1

Author:	Aitken, Brian; Harrison, Ann; DEC;	Collection Title:	Policy, Research working paper ; no. WPS 1248
Date Stored:	1994/02/01	Document Date:	1994/02/28
Document Type:	Policy Research Working Paper	Language:	English
Major Sector:	Finance	Report Number:	WPS1248
Sub Sectors:	Other Finance	SubTopics:	Environmental Economics & Policies; Foreign Direct Investment; International Terrorism & Counterterrorism; Economic Theory & Research; Trade and Regional Integration
Volume No:	1

Summary: Many developing countries now actively solicit foreign investment, offering firms subsidies, tax holidays, and exemptions from import duties. One justification for subsidizing these firms is the so-called spillover of technology from foreign to domestic firms. Using panel data -- following more than 4,000 Venezuelan firms from 1975 through 1989 -- The authors explore two aspects of the effect of foreign direct investment. First, they examine the relative performance to joint ventures and domestic firms. They find that increases in foreign equity participation are strongly correlated with increases in plant productivity. Second, they measure the impact of joint ventures and foreign subsidiaries on plants with no foreign investment. Facing fewer data limitations than in previous studies, they find that foreign investment negatively affects the productivity of domestically owned plants. These results suggest that whatever technology gains occur through foreign investment are captured entirely by joint ventures.


Official Documents Official, scanned versions of documents (may include signatures, etc.)
File Type		Description	File Size (mb)

	PDF 47 pages	Official version*	3.29 (approx.)
	Text	Text version**

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.

** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.

Permanent URL for this page: http://go.worldbank.org/PMVJDYDN30