Foreign Direct Investment and Knowledge Diffusion in Poor Locations / Girum Abebe, Margaret S. McMillan, Michel Serafinelli.

Format:

Book

Author/Creator:

Abebe, Girum.

Contributor:

National Bureau of Economic Research.

McMillan, Margaret Stokes.

Serafinelli, Michel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24461.

NBER working paper series no. w24461

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Foreign Direct Investment and Knowledge Diffusion in Poor Locations

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

We use a plant level survey to identify interactions between domestic plants and foreign direct investment (FDI) in Ethiopia's manufacturing sector. One third of Ethiopian plants are linked to FDI through labor sharing, supply chains and competition. Technology upgrading most commonly occurs as a result of competition in output markets and observation and imitation of FDI in the same line of business. Other benefits include enhanced managerial practices and knowledge about exporting. Spillovers from FDI are identified by comparing changes in total factor productivity (TFP) among domestic plants in districts where a large greenfield foreign plant produces and districts where FDI in the same industry and around the same time was licensed but not yet operational. Over the four years starting with the year of the FDI opening, the TFP of domestic plants is 11 percent higher in treated districts, employment in domestic plants increases and more domestic plants open.

Notes:

Print version record

March 2018.