FDI and Productivity Covergence in Central and Eastern Europe: An Industry-Level Investigation
48 Pages Posted: 2 Feb 2009
Date Written: January 14, 2009
This paper presents empirical evidence of the effect of FDI inflows on productivity convergence in central and eastern Europe, using industry-level data. Four conclusions stand out. First, there is a strong convergence effect in productivity, both at the country and at the industry level. Second, FDI inflow plays an important role in accounting for productivity growth. Third, the impact of FDI on productivity critically depends on the absorptive capacity of recipient countries and industries. Fourth, there is important heterogeneity across countries, industries and time with respect to some of the main findings.
Keywords: productivity convergence, FDI, absorptive capacity
JEL Classification: C23, F21, O33
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