Foreign Direct Investment Spillovers and the Absorption Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992-2001)

Daniel Chudnovsky, Andrés López and Gaston Rossi
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Daniel Chudnovsky: Department of Economics, Universidad de San Andres & CENIT
Gaston Rossi: CENIT & Universidad de Buenos Aires

No 74, Working Papers from Universidad de San Andres, Departamento de Economia

Abstract: Argentina received large amounts of FDI inflows during the 90s. At the same time, deep structural reforms were introduced, forcing domestic firms to rapidly undertake restructuring processes in order to adapt to the new economic and institutional environment. This paper explores to what extent FDI helped or hindered those restructuring processes, analyzing whether positive (or negative) productivity spillovers arose from the increasing presence of TNCs affiliates. We found that TNCs affiliates have higher productivity levels than domestic firms and that the latter, on average, received neither positive nor negative horizontal and vertical (backward) spillovers from the growing presence of foreign firms in the local economy. However, we also found that domestic firms with high absorption capabilities reaped positive spillovers from TNCs presence while those with low absorption capabilities were more likely to receive negative spillovers. These findings suggest that those capabilities are key determinants of the possibilities of domestic firms to take advantage of incoming FDI flows into their countries.

Keywords: FDI; spillovers; productivity (search for similar items in EconPapers)
JEL-codes: L60 O12 O19 O31 O32 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2004-07, Revised 2004-07
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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https://webacademicos.udesa.edu.ar/pub/econ/doc74.pdf First version, 2004 (application/pdf)

Related works:
Journal Article: Foreign Direct Investment Spillovers and the Absorptive Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992-2001) (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:sad:wpaper:74

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