DMCA
Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela (1999)
| Venue: | AMERICAN ECONOMIC REVIEW |
| Citations: | 757 - 5 self |
BibTeX
@ARTICLE{Aitken99dodomestic,
author = {Brian J. Aitken and Ann E. Harrison},
title = {Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela},
journal = {AMERICAN ECONOMIC REVIEW},
year = {1999},
pages = {605--618}
}
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Abstract
Governments often promote inward foreign investment to encourage technology “spillovers” from foreign to domestic firms. Using panel data on Venezuelan plants, we find that foreign equity participation is positively correlated with plant produc-tivity (the “own-plant” effect), but this relationship is only robust for small enter-prises. We then test for spillovers from joint ventures to plants with no foreign investment. Foreign investment negatively affects the productivity of domestically owned plants. The net impact of foreign investment, taking into account these two offsetting effects, is quite small. The gains from foreign investment appear to be entirely captured by joint ventures.
Keyphrases
direct foreign investment domestic firm benefit foreign investment joint venture technology spillover net impact devel-oping country jel f2 total capital venezuelan plant plant produc-tivity foreign equity participation panel data own-plant effect domestic firm private capital virtual disap single source foreign investment appear small enter-prises external finance inward foreign investment
