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Learning or Leaning: Persistent and Transitory Spillovers from FDI
Date Issued
2016-02
Date Available
2016-02-23T12:42:51Z
Abstract
Using firm-level data for Jordan, we estimate 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 which evaporate following disinvestment). We find that they 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 of Material
Working Paper
Publisher
University College Dublin. School of Economics
Start Page
1
End Page
25
Series
UCD Centre for Economic Research Working Paper Series
WP2016/01
Keywords
Classification
F23
F16
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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