Which firms benefit from foreign direct investment? Empirical evidence from Indonesian manufacturing
MetadataShow full item record
This is the author’s version of a work that was accepted for publication in Journal of Asian Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Asian Economics, Volume 33, August 2014, Pages 16–29. http://doi.org/10.1016/j.asieco.2014.05.003
Despite growing concern regarding the productivity benefits of foreign direct investment (FDI), very few studies have been conducted on the impact of FDI on firm-level technical efficiency. This study helps fill this gap by empirically examining the spillover effects of FDI on the technical efficiency of Indonesian manufacturing firms. A panel data stochastic production frontier (SPF) method is applied to 3318 firms surveyed over the period 1988–2000. The results reveal evidence of positive FDI spillovers on technical efficiency. Interesting differences emerge however when the samples are divided into two efficiency levels. High-efficiency domestic firms receive negative spillovers, in general, while low-efficiency firms gain positive spillovers. These findings justify the hypothesis of efficiency gaps, that the larger is the efficiency gap between domestic and foreign firms the easier the former extracts spillover benefits from the latter.
Showing items related by title, author, creator and subject.
Foreign direct investment spillovers and technical efficiency in the Indonesian pharmaceutical sector: firm level evidenceSuyanto, Suyanto; Salim, Ruhul (2011)The spillovers of Foreign Direct Investment (FDI) on domestic firms’ performances have been highly debated for many years. This article contributes to this debate by analysing spillovers effects on technical efficiency ...
Foreign direct investment spillovers and productivity growth in Indonesian garment and electronics manufacturingSuyanto; Bloch, Harry; Salim, Ruhul (2012)Inflows of foreign direct investment generate externalities that spill over to domestic firms and raise their productivity. This article examines the extent of spillover effects of foreign direct investment for firms in ...
Suyanto, Suyanto; Salim, Ruhul; Bloch, Harry (2009)This paper examines whether spillovers from foreign direct investment (FDI) make any contribution to productivity growth in the Indonesian chemical and pharmaceutical firms using plant-level panel data. The spillover ...