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    Which firms benefit from foreign direct investment? Empirical evidence from Indonesian manufacturing

    199370_199370.pdf (588.2Kb)
    Access Status
    Open access
    Authors
    Suyanto
    Salim, Ruhul
    Bloch, Harry
    Date
    2014
    Type
    Journal Article
    
    Metadata
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    Citation
    Suyanto and Salim, R. and Bloch, H. 2014. Which firms benefit from foreign direct investment? Empirical evidence from Indonesian manufacturing. Journal of Asian Economics. 33: pp. 16-29.
    Source Title
    Journal of Asian Economics
    DOI
    10.1016/j.asieco.2014.05.003
    ISSN
    1049-0078
    Remarks

    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

    URI
    http://hdl.handle.net/20.500.11937/43667
    Collection
    • Curtin Research Publications
    Abstract

    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.

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