Does FDI Facilitate Domestic Entry? Evidence from the Czech Republic

16 Pages Posted: 18 Jan 2010

See all articles by Meghana Ayyagari

Meghana Ayyagari

University of Maryland - Robert H. Smith School of Business; George Washington University - School of Business

Renáta Kosová

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Abstract

This paper analyzes the impact of FDI on domestic firm entry and firm size distributions in the Czech Republic during 1994–2000. We find that larger foreign presence stimulates the entry of domestic firms within the same industry, indicating the existence of positive horizontal spillovers from FDI. We also find evidence of significant vertical entry spillovers - FDI in downstream (upstream) industries initiates entry in upstream (downstream) sectors. Our results also show that entry spillovers through vertical linkages are stronger than horizontal spillovers and that while service industries benefit from both horizontal and vertical spillovers, manufacturing industries do not experience significant positive entry spillovers of any kind. We also find that country of origin of FDI matters - horizontal spillovers are driven by FDI from the EU countries. The right skewness of the firm size distributions in industries without FDI further emphasizes an important role of FDI presence for overall industry dynamics.

Suggested Citation

Ayyagari, Meghana and Ayyagari, Meghana and Kosová, Renáta, Does FDI Facilitate Domestic Entry? Evidence from the Czech Republic. Review of International Economics, Vol. 18, Issue 1, pp. 14-29, February 2010, Available at SSRN: https://ssrn.com/abstract=1537426 or http://dx.doi.org/10.1111/j.1467-9396.2009.00854.x

Meghana Ayyagari (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

George Washington University - School of Business ( email )

Washington, DC 20052
United States

Renáta Kosová

affiliation not provided to SSRN

No Address Available

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
432
PlumX Metrics