Learning or Leaning : Persistent and Transitory Growth Spillovers from FDI

Using firm-level data for Jordan, the paper estimates the extent to which growth spillovers from foreign direct investment (FDI) to local firms stem from persistent learning externalities (i.e., they endure even after foreign investment leaves as knowledge has been transferred to local firms) or from transitory effects (e.g., demand increases that evaporate following disinvestment). The paper find that spillovers have a significant transitory nature, with employment and capital growth declining when FDI falls, particularly in downstream industries supplied by locals. This suggests that if FDI-attracting policies are intended to promote sustainable growth, it may be more effective to attract and retain FDI via long-term structural policies, for instance, through low corporate tax rates rather than temporary tax holidays or through policies that strengthen the domestic absorptive capacity and linkages between foreign and local firms.

Bibliographic Details

Main Authors:	Davies, Ronald B., Lamla, Michael J., Schiffbauer, Marc
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2016-03
Subjects:	TAX INCENTIVES, GROWTH RATES, EMPLOYMENT, CREDIT MARKETS, EXTERNAL, MNES, EXPORT MARKETS, ECONOMIC GROWTH, ACCOUNTING, PRODUCTION, LAGS, MULTINATIONAL CORPORATIONS, FOREIGN INVESTORS, INCOME, FOREIGN OWNERSHIP, EQUILIBRIUM PRICE, MARGINAL COST, EMERGING ECONOMIES, REGULATORY ENVIRONMENTS, EXCHANGE, INFORMATION, LABOR FORCE, DEVELOPING COUNTRIES, ELASTICITY, DEVELOPING ECONOMIES, INVESTMENT GROWTH, EFFECTS, INCENTIVES, ECONOMIC POLICY, VARIABLES, CAPITAL STOCK, PRICE, TAX, INPUTS, JOINT VENTURES, OWNERSHIP, INVESTMENT BY SECTOR, FOREIGN INVESTMENTS, DEVELOPING COUNTRY, TRENDS, COMMUNICATIONS, ADVANCED COUNTRIES, MULTINATIONAL ENTERPRISES, GLOBAL ECONOMY, TRAINING, DEVELOPMENT ECONOMICS, PORTFOLIOS, PRODUCTIVITY, EXTERNALITIES, TRANSFERS, MARKETS, ORGANIZATIONS, PUBLIC FINANCE, INTERNATIONAL ECONOMICS, TECHNOLOGY TRANSFERS, DIRECT INVESTMENT, LABOR, ELASTICITY OF SUBSTITUTION, DISINVESTMENT, UTILITY, REAL ESTATE, FINANCE, CORPORATE TAX, MARKET ECONOMIES, INVESTMENT DECISIONS, TECHNOLOGY, EQUITY, INVESTORS, PRODUCTIVITY GROWTH, ECONOMIC SURVEYS, CAPITAL, POLICIES, CAPITAL VARIABLE, VALUE, FOREIGN DIRECT INVESTMENT, CREDIT, FOREIGN TECHNOLOGY, MACROECONOMICS, FOREIGN INVESTMENT, DEMAND, TRANSITION COUNTRIES, TAX RATES, EMPLOYMENT GROWTH, FOREIGN TECHNOLOGIES, JOB CREATION, SHARES, AFFILIATED ORGANIZATIONS, BENCHMARK, EMERGING, PRODUCTION FUNCTION, ECONOMICS, OUTPUT, MANAGEMENT, REGRESSION ANALYSIS, COMPARATIVE ECONOMICS, EXPOSURE, ECONOMIC DEVELOPMENT, TRADE, GDP, GOODS, THEORY, SECURITY, ECONOMIES OF SCALE, DOMESTIC ECONOMY, TECHNOLOGY TRANSFER, GROWTH RATE, INVESTMENT, RISK, HOST COUNTRY, SHARE, FDI, INTERNATIONAL STANDARD, SUPPLY, BANKING, AFFILIATED, FOREIGN WORKERS, MNE, INVESTMENTS, SUPPLIERS, LABOUR, CAPITAL INVESTMENT, TECHNOLOGIES, PRICES, DEVELOPMENT POLICY, COMPETITION, INVESTMENT DECISION,
Online Access:	http://documents.worldbank.org/curated/en/2016/03/26009198/learning-or-leaning-persistent-transitory-growth-spillovers-fdi http://hdl.handle.net/10986/23930
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