FDI and productivity growth: the role of inter‐industry linkages

Yanling Wang

60 citations0/0 files storedCanadian Journal of Economics/Revue canadienne d économique

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International Business and FDI Global trade and economics Economic Growth and Productivity

Abstract

Abstract There is a large literature on the effects of foreign direct investment (FDI) on productivity through inter‐industry economic linkages. This paper contributes to the literature by focusing on the developed economy of Canada. It finds that FDI generates strong effects on total factor productivity (TFP) growth through both forward and backward inter‐industry linkages, and increase in an industry's absorptive capacity raises the effects of FDI on TFP growth through forward inter‐industry linkages. For R&D intensive industries, the effects of FDI on TFP growth through inter‐industry linkages are small, but imports turn out to be an important source for TFP growth.

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References

1998How does foreign direct investment affect economic growth?1999Does Trade Cause Growth?1995International R&D spillovers 1999Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela 2004Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages 2007Multinational Enterprise and Economic Analysis 2002Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages 1995The Boundaries of Multinational Enterprises and the Theory of International Trade

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