Productivity Spillovers from Multinational Corporations in Portugal: Vulnerability to Deficient Estimation

12 Pages Posted: 20 Aug 2008  

Isabel Maria Dias Proenca

Technical University of Lisbon (UTL) - School of Economics and Management

Maria Paula Fontoura

Technical University of Lisbon (UTL) - Department of Economics; UECE - Research Unit on Complexity in Economics

Nuno Crespo

Technical University of Lisbon (UTL) - Department of Economics

Date Written: August 20, 2008

Abstract

Evidence on productivity spillovers from FDI to domestic firms is ambiguous. Incorrect estimation procedures may be one of the sources for the contradictory results obtained in empirical studies on this subject. We observe that inadequacy of the estimation procedures leads to a severe underestimation of the spillover effect. An appropriated econometric methodology is discussed taking into consideration the possible simultaneity of FDI and other explanatory variables and endogeneity related to firm unobserved heterogeneity. Robust inference is also addressed. Our findings for the Portuguese case seem sufficient clear to warn about spillover results obtained with a non-judicious application of the classical panel data methods.

Keywords: Domestic firm productivity, Multinational corporation, Technological spillovers, Panel data, Extended GMM, Portugal

JEL Classification: F21, F23, O52

Suggested Citation

Dias Proenca, Isabel Maria and Fontoura, Maria Paula and Crespo, Nuno, Productivity Spillovers from Multinational Corporations in Portugal: Vulnerability to Deficient Estimation (August 20, 2008). Applied Econometrics and International Development, Vol. 6, No. 1, 2006. Available at SSRN: https://ssrn.com/abstract=1240508

Isabel Maria Dias Proenca (Contact Author)

Technical University of Lisbon (UTL) - School of Economics and Management ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

Maria Paula Fontoura

Technical University of Lisbon (UTL) - Department of Economics ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal

UECE - Research Unit on Complexity in Economics ( email )

ISEG/UTL, Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

Nuno Crespo

Technical University of Lisbon (UTL) - Department of Economics ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal

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