FDI Linkages in Serbia : Policy Note
This note examines the relationship between the presence of foreign firms and TFP growth of domestic firms (called FDI spillovers) in Serbia over 2005-2016 period. The analysis finds evidence of FDI spillovers in Serbia like domestic firms on avera...
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| Format: | Policy Note |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/894691565597510741/FDI-Linkages-in-Serbia-Policy-Note http://hdl.handle.net/10986/32249 |
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okr-10986-322492021-05-25T09:27:16Z FDI Linkages in Serbia : Policy Note Brussevich, Mariya Tan, Shawn W. FOREIGN DIRECT INVESTMENT SPILLOVER FIRM PRODUCTIVITY TECHNOLOGY TRANSFER GLOBAL VALUE CHAIN COMPETITION POLICY SMALL AND MEDIUM ENTERPRISES This note examines the relationship between the presence of foreign firms and TFP growth of domestic firms (called FDI spillovers) in Serbia over 2005-2016 period. The analysis finds evidence of FDI spillovers in Serbia like domestic firms on average enjoy higher productivity because of the presence of FDI firms in the economy. Moreover, domestic firms that supply to FDI firms, or are located in the same industry as FDI firms, enjoy higher productivity presumably stemming from technology transfer, higher quality standards, or higher competition. However, productivity of domestic firms sourcing from industries with a large share of FDI firms find their productivity reduced, presumably due to mark-ups by foreign firms. The effect of FDI on productivity of domestic firms also varies by firm size and industry. Small firms benefit more from spillovers associated with backward linkages (when they supply to and FDI firm) but are worse off with more horizontal FDI (when they compete with FDI firms in the same industry). Firms in high-tech industries benefit more from horizontal and backward FDI spillovers but there is no effect for firms in low-tech industries. Lastly, firms in transport manufacturing industry do not enjoy any FDI spillovers from foreign firms in their industry. The government therefore can do more to ensure that domestic firms, especially small and medium firms and those in low-tech industries, benefit from FDI through entrepreneurship and innovation programs. Such programs can include export readiness and export coaching programs, which will improve the export performance of domestic firms and strengthen linkages with foreign firms in the country, and supplier linkages programs that can provide technical assistance to domestic firms and information to foreign firms about potential domestic suppliers. In addition, programs targeted toward increasing innovation and technology adoption of domestic firms can help them to achieve high enough productivity levels to be able to absorb FDI spillovers. 2019-08-15T17:20:04Z 2019-08-15T17:20:04Z 2018-12-31 Policy Note http://documents.worldbank.org/curated/en/894691565597510741/FDI-Linkages-in-Serbia-Policy-Note http://hdl.handle.net/10986/32249 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Policy Note Europe and Central Asia Serbia |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English |
| topic |
FOREIGN DIRECT INVESTMENT SPILLOVER FIRM PRODUCTIVITY TECHNOLOGY TRANSFER GLOBAL VALUE CHAIN COMPETITION POLICY SMALL AND MEDIUM ENTERPRISES |
| spellingShingle |
FOREIGN DIRECT INVESTMENT SPILLOVER FIRM PRODUCTIVITY TECHNOLOGY TRANSFER GLOBAL VALUE CHAIN COMPETITION POLICY SMALL AND MEDIUM ENTERPRISES Brussevich, Mariya Tan, Shawn W. FDI Linkages in Serbia : Policy Note |
| geographic_facet |
Europe and Central Asia Serbia |
| description |
This note examines the relationship
between the presence of foreign firms and TFP growth of
domestic firms (called FDI spillovers) in Serbia over
2005-2016 period. The analysis finds evidence of FDI
spillovers in Serbia like domestic firms on average enjoy
higher productivity because of the presence of FDI firms in
the economy. Moreover, domestic firms that supply to FDI
firms, or are located in the same industry as FDI firms,
enjoy higher productivity presumably stemming from
technology transfer, higher quality standards, or higher
competition. However, productivity of domestic firms
sourcing from industries with a large share of FDI firms
find their productivity reduced, presumably due to mark-ups
by foreign firms. The effect of FDI on productivity of
domestic firms also varies by firm size and industry. Small
firms benefit more from spillovers associated with backward
linkages (when they supply to and FDI firm) but are worse
off with more horizontal FDI (when they compete with FDI
firms in the same industry). Firms in high-tech industries
benefit more from horizontal and backward FDI spillovers but
there is no effect for firms in low-tech industries. Lastly,
firms in transport manufacturing industry do not enjoy any
FDI spillovers from foreign firms in their industry. The
government therefore can do more to ensure that domestic
firms, especially small and medium firms and those in
low-tech industries, benefit from FDI through
entrepreneurship and innovation programs. Such programs can
include export readiness and export coaching programs, which
will improve the export performance of domestic firms and
strengthen linkages with foreign firms in the country, and
supplier linkages programs that can provide technical
assistance to domestic firms and information to foreign
firms about potential domestic suppliers. In addition,
programs targeted toward increasing innovation and
technology adoption of domestic firms can help them to
achieve high enough productivity levels to be able to absorb
FDI spillovers. |
| format |
Policy Note |
| author |
Brussevich, Mariya Tan, Shawn W. |
| author_facet |
Brussevich, Mariya Tan, Shawn W. |
| author_sort |
Brussevich, Mariya |
| title |
FDI Linkages in Serbia : Policy Note |
| title_short |
FDI Linkages in Serbia : Policy Note |
| title_full |
FDI Linkages in Serbia : Policy Note |
| title_fullStr |
FDI Linkages in Serbia : Policy Note |
| title_full_unstemmed |
FDI Linkages in Serbia : Policy Note |
| title_sort |
fdi linkages in serbia : policy note |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/894691565597510741/FDI-Linkages-in-Serbia-Policy-Note http://hdl.handle.net/10986/32249 |
| _version_ |
1764476153496600576 |