Local Intermediate Inputs and the Shared Supplier Spillovers of Foreign Direct Investment

Local Intermediate Inputs and the Shared Supplier Spillovers of Foreign Direct Investment

Trade liberalizations have been shown to improve domestic firms' performance through the new varieties of imported intermediate inputs. This paper uses a unique, representative sample of Bangladeshi garment firms to highlight that local interm...

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Bibliographic Details
Main Author:	Kee, Hiau Looi
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	ACCOUNTING AGGREGATE DEMAND AVERAGE PRODUCTIVITY CAPITAL INVESTMENT CLIMATE CHANGE COMMON MARKET COMMON MARKETS CONSTRUCTION CUSTOMS DEVELOPMENT POLICY E-MAIL ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMICS ELASTICITY ELASTICITY OF SUBSTITUTION EQUIPMENT EXPORT MARKETS EXPORTS EXTERNALITIES FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT GDP GLOBALIZATION GOVERNMENT POLICIES GROWTH MODELS INPUT PRICES INTERMEDIATE GOODS INTERNATIONAL TRADE MANUFACTURING MANUFACTURING INDUSTRIES MARGINAL COSTS MARKET COMPETITION MARKET SHARE MARKET SHARES MATERIAL OPEN ACCESS OPEN ECONOMY OVERSEAS BUYERS OWNERSHIP STRUCTURE PECUNIARY EXTERNALITIES PERFORMANCE INDICATORS POLITICAL ECONOMY POSITIVE EXTERNALITIES PRICE INDEX PRICE INDEXES PRICE INDICES PRICE LEVEL PRODUCT QUALITY PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION PROCESS PRODUCTIVITY PRODUCTIVITY GROWTH REGRESSION ANALYSIS RESULT RESULTS RETURNS TO SCALE SEARCH SUBSTITUTION SUPPLIER SUPPLIERS SUPPLY CHAIN TECHNOLOGY TRANSFER TELECOMMUNICATIONS TOTAL FACTOR PRODUCTIVITY TOTAL OUTPUT TOTAL REVENUE TOTAL SALES TRADE LIBERALIZATION TRADE POLICIES TRADE POLICY UNEMPLOYMENT USES VALUE ADDED WAGES
Online Access:	http://documents.worldbank.org/curated/en/2014/09/20251617/local-intermediate-inputs-shared-supplier-spillovers-foreign-directbrinvestment http://hdl.handle.net/10986/20366

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Summary:	Trade liberalizations have been shown to improve domestic firms' performance through the new varieties of imported intermediate inputs. This paper uses a unique, representative sample of Bangladeshi garment firms to highlight that local intermediate inputs may also enhance domestic firms' performance, through the shared supplier spillovers of foreign direct investment (FDI) firms. An exogenous EU trade policy shock is shown to cause some FDI firms in Bangladesh to expand, which led to better performance of the domestic firms that shared their suppliers. Overall, the shared supplier spillovers of FDI explain 1/4 of the product scope expansion and 1/3 of the productivity gains within domestic firms.