Foreign Direct Investment & Productivity

<p>To what extent does Foreign Direct Investment create spillovers that boost the productivity of domestic businesses? Economics Explored host Gene Tunny speaks with the authors of a recent study addressing this question: Sara McGaughey, soon to take up a position as Professor at Copenhagen Business School, and Professor Pascalis Raimondos, Head of the School of Economics and Finance at QUT Business School in Brisbane, Australia. </p><p>Sara and Pascalis have taken advantage of the huge Orbis business database which has allowed them to construct a panel dataset of nearly 576,000 manufacturing firms across 20 European countries. They find evidence that controlled foreign firms can boost the productivity of other firms in the same industry (horizontal spillovers), while previous studies had only convincingly found evidence of vertical spillovers, between foreign affiliates and their domestic suppliers. </p><p>The study is titled <a href="https://www.researchgate.net/publication/343082973_Foreign_influence_control_and_indirect_ownership_Implications_for_productivity_spillovers" target="_blank">Foreign Influence, control, and indirect ownership: Implications for productivity spillovers</a> and was published in July 2020 in the <i>Journal of International Business Studies</i>.</p><p>The authors can be contacted regarding their research via pascalis.raimondos@qut.edu.au</p><p>To get in touch with Gene,  and to ask any questions or provide any comments or suggestions, please email him via contact@economicsexplored.com</p><p><i><strong>Links relevant to the conversation</strong></i></p><p><a href="https://inqld.com.au/business/2021/01/19/how-hiring-this-man-instantly-added-100-million-to-value-of-brisbane-company/" target="_blank">How hiring this man gave Brisbane company an instant $100m windfall</a></p><p><a href="https://cleantechnica.com/2020/09/27/teslas-100-american-owned-factory-in-china-is-a-big-deal-heres-why/" target="_blank">Tesla’s 100% American Owned Factory In China Is A Big Deal<strong> </strong></a></p><p