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Learning or Leaning : Persistent and Transitory Growth Spillovers from FDI

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World Bank (WB)

Abstract: Using firm-level data for Jordan, the paper estimates the extent to which growth spillovers from foreign direct investment (FDI) to local firms stem from persistent learning externalities (i.e., they endure even after foreign investment leaves as knowledge has been transferred to local firms) or from transitory effects (e.g., demand increases that evaporate following disinvestment). The paper find that spillovers have a significant transitory nature, with employment and capital growth declining when FDI falls, particularly in downstream industries supplied by locals. This suggests that if FDI-attracting policies are intended to promote sustainable growth, it may be more effective to attract and retain FDI via long-term structural policies, for instance, through low corporate tax rates rather than temporary tax holidays or through policies that strengthen the domestic absorptive capacity and linkages between foreign and local firms.
Type: Working Paper
Publications & Research
Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/23930
Subject: TAX INCENTIVES
GROWTH RATES
EMPLOYMENT
CREDIT MARKETS
EXTERNAL
MNES
EXPORT MARKETS
ECONOMIC GROWTH
ACCOUNTING
PRODUCTION
LAGS
MULTINATIONAL CORPORATIONS
FOREIGN INVESTORS
INCOME
FOREIGN OWNERSHIP
EQUILIBRIUM PRICE
MARGINAL COST
EMERGING ECONOMIES
REGULATORY ENVIRONMENTS
EXCHANGE
INFORMATION
LABOR FORCE
DEVELOPING COUNTRIES
ELASTICITY
DEVELOPING ECONOMIES
INVESTMENT GROWTH
EFFECTS
INCENTIVES
ECONOMIC POLICY
VARIABLES
CAPITAL STOCK
PRICE
TAX
INPUTS
JOINT VENTURES
OWNERSHIP
INVESTMENT BY SECTOR
FOREIGN INVESTMENTS
DEVELOPING COUNTRY
TRENDS
COMMUNICATIONS
ADVANCED COUNTRIES
MULTINATIONAL ENTERPRISES
GLOBAL ECONOMY
TRAINING
DEVELOPMENT ECONOMICS
PORTFOLIOS
PRODUCTIVITY
EXTERNALITIES
TRANSFERS
MARKETS
ORGANIZATIONS
PUBLIC FINANCE
INTERNATIONAL ECONOMICS
TECHNOLOGY TRANSFERS
DIRECT INVESTMENT
LABOR
ELASTICITY OF SUBSTITUTION
DISINVESTMENT
UTILITY
REAL ESTATE
FINANCE
CORPORATE TAX
MARKET ECONOMIES
INVESTMENT DECISIONS
TECHNOLOGY
EQUITY
INVESTORS
PRODUCTIVITY GROWTH
ECONOMIC SURVEYS
CAPITAL
POLICIES
CAPITAL VARIABLE
VALUE
FOREIGN DIRECT INVESTMENT
CREDIT
FOREIGN TECHNOLOGY
MACROECONOMICS
FOREIGN INVESTMENT
DEMAND
TRANSITION COUNTRIES
TAX RATES
EMPLOYMENT GROWTH
FOREIGN TECHNOLOGIES
JOB CREATION
SHARES
AFFILIATED ORGANIZATIONS
BENCHMARK
EMERGING
PRODUCTION FUNCTION
ECONOMICS
OUTPUT
MANAGEMENT
REGRESSION ANALYSIS
COMPARATIVE ECONOMICS
EXPOSURE
ECONOMIC DEVELOPMENT
TRADE
GDP
GOODS
THEORY
SECURITY
ECONOMIES OF SCALE
DOMESTIC ECONOMY
TECHNOLOGY TRANSFER
GROWTH RATE
INVESTMENT
RISK
HOST COUNTRY
SHARE
FDI
INTERNATIONAL STANDARD
SUPPLY
BANKING
AFFILIATED
FOREIGN WORKERS
MNE
INVESTMENTS
SUPPLIERS
LABOUR
CAPITAL INVESTMENT
TECHNOLOGIES
PRICES
DEVELOPMENT POLICY
COMPETITION
INVESTMENT DECISION




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