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Local linkages: The interdependence of foreign and domestic firms
Author(s)
Date Issued
2017-06
Date Available
2017-08-18T14:59:19Z
Abstract
This paper investigates the interdependence of foreign and domestic firms’ local linkage decisions and the extent to which they respond differently to variations in export intensity and productivity originating from each of the two groups of firms. Our empirical analysis, based on Irish data, uncovers an interesting asymmetric pattern in the local linkage dynamics of foreign and domestic firms. We find that local linkages of domestic firms tend to evolve independently of their foreign counterpart, and that they react almost instantaneously to exogenous events such as increases in export intensity or productivity. Local linkages of foreign firms, by contrast, react gradually to exogenous events and the impact works through the reverberating dynamics of the lagged linkages of both foreign and domestic firms. The Irish experience is instructive to policymakers in emerging markets who are naturally interested in the best way to maximize the value of FDI, in terms of benefits the latter brings about for sustainable economic development.
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Start Page
1
End Page
22
Series
UCD Centre for Economic Research Working Paper Series
WP2017/12
Classification
F23
L22
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
File(s)
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Name
WP17_12.pdf
Size
319.87 KB
Format
Adobe PDF
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