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 k...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| 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 |
| Summary: | 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. |
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