Working Paper: CEPR ID: DP4857
Authors: László Halpern; Balázs Muraközy
Abstract: This Paper examines the technology transfer through FDI in Hungary, using a large panel dataset of 24,000 firm-level observations. We distinguish horizontal (intra-industry) and vertical (inter-industry) spillovers. Besides the sign and magnitude of these effects we are interested in the spatial structure of these technology transfers. For this we use distance data, correct for sample selection and for the endogeneity of input demand use Arellano-Bond dynamic panel data technique. Our main findings are that there are significant horizontal and backward spillovers for domestic-owned firms suggesting the presence of foreign competitors and customers is beneficial for domestic firms. The effect of regional and county boundaries is insignificant. Using the distance data we find clear spatial structure of spillovers: for domestic firms the foreign presence only matters in very small distance (25 km), for foreign-owned firms the stronger the spillover the larger the distance (50 and 100 km).
Keywords: foreign direct investments; spillovers; technology transfer
JEL Codes: D24; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Foreign direct investment (FDI) presence (F23) | Productivity of domestic firms (D22) |
| Foreign competitors and customers (F23) | Productivity of domestic firms (D22) |
| Backward spillovers from foreign customers (F23) | Productivity of domestic suppliers (D24) |
| Presence of foreign suppliers (F23) | Productivity of domestic firms (D22) |
| Regional and county boundaries (R50) | Spillover effects (F69) |
| Distance from foreign firms (F23) | Spillover effects for domestic firms (F23) |