Foreign Direct Investment and Efficiency Benefits: A Conditional Quantile Analysis

32 Pages Posted: 26 Jul 2001

See all articles by Sophia Dimelis

Sophia Dimelis

Athens University of Economics and Business - Department of Informatics

Helen Louri

Athens University of Economics and Business - Department of Economics

Date Written: June 2001

Abstract

This Paper analyses the production efficiency gains in terms of technology transfer and labour productivity changes caused by diverse degrees of foreign ownership. The analysis is based on a sample of 4056 domestic and foreign manufacturing firms operating in Greece in 1997. Departures from normality of labour productivity and its logarithm led to the adoption of the robust technique of quantile regression as providing a better view of the examined relationships by obtaining estimates at different quantiles. Interesting results include a positive and significant effect of foreign ownership on labour productivity which stems exclusively from full and majority owned affiliates and becomes significant only in the middle quantiles. Productivity spillovers benefiting local firms are also differentiated by degree of foreign ownership, with minority holdings exercising a stronger effect in most quantiles. Such distinct FDI effects stress the importance of policy modifications according to the level of development in the host economy, and the selected objectives.

Keywords: Productivity, spillovers, multinationals, FDI

JEL Classification: F23, O30

Suggested Citation

Dimelis, Sophia (Sofia) and Louri, Eleni (Helen), Foreign Direct Investment and Efficiency Benefits: A Conditional Quantile Analysis (June 2001). CEPR Discussion Paper No. 2868. Available at SSRN: https://ssrn.com/abstract=276786

Sophia (Sofia) Dimelis (Contact Author)

Athens University of Economics and Business - Department of Informatics ( email )

76 Patission Street
GR-10434 Athens
Greece
+30 1 820 3153 (Phone)
+30 1 823 1725 (Fax)

Eleni (Helen) Louri

Athens University of Economics and Business - Department of Economics ( email )

76 Patission Street
GR-10434 Athens
Greece
+30 1 8203122 (Phone)
+30 1 8238249 (Fax)

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