Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2017-09-05
Revision-Date: 2018-10-01
Number: 17-078/IV
Author-Name: Christian Fons-Rosen
Author-Email: christian.fons-rosen@upf.edu
Author-Workplace-Name: Universitat Pompeu Fabra, CEPR, and Barcelona Graduate School of Economics, Spain
Author-Name: Sebnem Kalemli-Ozcan
Author-Email: kalemli@econ.umd.edu
Author-Workplace-Name: University of Maryland, CEPR, and NBER, the USA
Author-Name: Bent E. Sorensen
Author-Email: besorensen@uh.edu
Author-Workplace-Name: University of Houston and CEPR, the USA
Author-Name: Carolina Villegas-Sanchez
Author-Email: carolina.villegas@esade.edu
Author-Workplace-Name: ESADE - Universitat Ramon Llull, Spain
Author-Name: Vadym (V.) Volosovych
Author-Email: volosovych@ese.eur.nl
Author-Workplace-Name: Erasmus University Rotterdam,  Erasmus Research Institute of Management, the Netherlands; Tinbergen Institute, The Netherlands
Title: Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects
Abstract: We study the impact of FDI on the productivity of host-country firms. FDI has positive spillovers only when foreign and domestic firms use similar technologies. Channeling FDI to sectors where firms share similar technology would significantly increase productivity spillovers from FDI. We show that inventor mobility across sectors is a key channel of technology transfer. To deal with endogeneity concerns we control for sectoral productivity growth, construct a Bartik-style instrument based on the productivity growth of neighboring countries, and exploit differences in knowledge flows across sectors captured by an asymmetric patent citation matrix.
Classification-JEL: E32; F15; F36; O16
Keywords: Multinationals; Competition; Technology; Selection; FDI; TFP
File-URL: https://papers.tinbergen.nl/17078.pdf
File-Format: application/pdf
File-Size: 1379882 bytes
Handle: RePEc:tin:wpaper:20170078