FDI horizontal and vertical effects on local firm technical efficiency

Chuc D. Nguyen, Gary Simpson, David Saal, Anh N. Nguyen, Ngoc Q. Pham

Research output: Working paper

Abstract

Differencing from previous studies on foreign direct investment (FDI) spillovers to domestic enterprises which mainly focus on productivity, in this paper we take a different perspective by analysing the impacts of FDI to technical efficiency of domestic firms. The paper goes beyond the current literature to shed some light on the spillover effects of FDI to technical efficiency of small and medium enterprises in a developing country. By exploiting a firm-level panel dataset and using SFA models following Battese and Coelli (1995), the paper is able to analyse horizontal spillovers through imitation and competition and labour mobility as well as vertical spillovers through backward and forward linkages on technical efficiency. The paper contributes to the understanding of potential effects on foreign invested enterprises on domestic economy in general and local enterprises performance in particular. Thus it importantly assists policy making by the government of developing countries, where FDI is believed to create technical spillovers on domestic enterprises.
Original languageEnglish
PublisherDEPOCEN
Number of pages23
Publication statusPublished - 2008

Publication series

NameDEPOCEN Working Paper Series
PublisherDEPOCEN
No.2008/17

Fingerprint

Technical efficiency
Spillover
Foreign direct investment
Developing countries
Linkage
Labour mobility
Productivity
Enterprise performance
Imitation
Government
Small and medium-sized enterprises
Domestic firms
Policy making
Foreign-invested enterprises
Spillover effects

Keywords

  • technical efficiency
  • spillovers
  • foreign direct investment

Cite this

Nguyen, C. D., Simpson, G., Saal, D., Nguyen, A. N., & Pham, N. Q. (2008). FDI horizontal and vertical effects on local firm technical efficiency. (DEPOCEN Working Paper Series; No. 2008/17). DEPOCEN.
Nguyen, Chuc D. ; Simpson, Gary ; Saal, David ; Nguyen, Anh N. ; Pham, Ngoc Q. / FDI horizontal and vertical effects on local firm technical efficiency. DEPOCEN, 2008. (DEPOCEN Working Paper Series; 2008/17).
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Nguyen, CD, Simpson, G, Saal, D, Nguyen, AN & Pham, NQ 2008 'FDI horizontal and vertical effects on local firm technical efficiency' DEPOCEN Working Paper Series, no. 2008/17, DEPOCEN.

FDI horizontal and vertical effects on local firm technical efficiency. / Nguyen, Chuc D.; Simpson, Gary; Saal, David; Nguyen, Anh N.; Pham, Ngoc Q.

DEPOCEN, 2008. (DEPOCEN Working Paper Series; No. 2008/17).

Research output: Working paper

TY - UNPB

T1 - FDI horizontal and vertical effects on local firm technical efficiency

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AU - Simpson, Gary

AU - Saal, David

AU - Nguyen, Anh N.

AU - Pham, Ngoc Q.

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N2 - Differencing from previous studies on foreign direct investment (FDI) spillovers to domestic enterprises which mainly focus on productivity, in this paper we take a different perspective by analysing the impacts of FDI to technical efficiency of domestic firms. The paper goes beyond the current literature to shed some light on the spillover effects of FDI to technical efficiency of small and medium enterprises in a developing country. By exploiting a firm-level panel dataset and using SFA models following Battese and Coelli (1995), the paper is able to analyse horizontal spillovers through imitation and competition and labour mobility as well as vertical spillovers through backward and forward linkages on technical efficiency. The paper contributes to the understanding of potential effects on foreign invested enterprises on domestic economy in general and local enterprises performance in particular. Thus it importantly assists policy making by the government of developing countries, where FDI is believed to create technical spillovers on domestic enterprises.

AB - Differencing from previous studies on foreign direct investment (FDI) spillovers to domestic enterprises which mainly focus on productivity, in this paper we take a different perspective by analysing the impacts of FDI to technical efficiency of domestic firms. The paper goes beyond the current literature to shed some light on the spillover effects of FDI to technical efficiency of small and medium enterprises in a developing country. By exploiting a firm-level panel dataset and using SFA models following Battese and Coelli (1995), the paper is able to analyse horizontal spillovers through imitation and competition and labour mobility as well as vertical spillovers through backward and forward linkages on technical efficiency. The paper contributes to the understanding of potential effects on foreign invested enterprises on domestic economy in general and local enterprises performance in particular. Thus it importantly assists policy making by the government of developing countries, where FDI is believed to create technical spillovers on domestic enterprises.

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KW - spillovers

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Nguyen CD, Simpson G, Saal D, Nguyen AN, Pham NQ. FDI horizontal and vertical effects on local firm technical efficiency. DEPOCEN. 2008. (DEPOCEN Working Paper Series; 2008/17).