Productivity spillovers from foreign direct investment in the Brazilian processing industry

Bruhn, Nádia Campos Pereira; Calegário, Cristina Lélis Leal

doi:10.1590/s1807-76922014000100003

Cited by 10 publications

(14 citation statements)

References 42 publications

(89 reference statements)

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“…The results suggest that the amount of FDI has a negative effect on firms' innovation, probably for the fact that foreign investment is concentrated in some sectors, as shown in Figure 4.1. Studies on Brazilian FDI demonstrated that higher technology sectors attract more FDI than the lower ones (Bruhn & Calegario, 2014). Besides that, not all host economies have the capacity to exploit the advantages of FDI due to the fact they simply do not have the absorptive capacity to do so (Cohen & Levinthal, 1990).…”

Section: Results For Generalized Linear Models Regressionmentioning

confidence: 99%

Innovation in Emerging Markets: The Role of Absorptive Capacity and of the Insertion in the Local and Global Value Chains

Calegário

Bruhn

Figueira

et al. 2019

RAM, Rev. Adm. Mackenzie

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Objective: The objective of this study is to identify the effects of the insertion in local and global value chains as a determinant of company innovation, identifying the main characteristics of the nature of the interactions that arise in the value chain, as well as the relationship between innovation, internal resources to the company and their insertion in value chains. Originality/value: This paper combines insights from different streams of literature to develop a more comprehensive framework for the analysis of firms’ innovation in emerging countries. We consider relationships among partners in the local and global value chain and the influence of the internal resources as crucially important for the access to external knowledge. Design/methodology/approach: Econometric analysis were performed using generalized linear models (GLM). The period of analysis covers the years 1998 to 2011. We investigate our hypotheses using different models to relate firms’ innovation capacity to local and global value chains and the ownership of internal and external resources. Findings: Using data from Brazilian firms from 1998 to 2011, we found that the relationship with all partners in global value chain contributed to the increase of the Brazilian firm’s innovation. The internal resources had a positive influence in firm’s innovation, suggesting that the firm’s internal resources are crucially important in the access to external knowledge, which means that the ability of firms to make use of this knowledge depends, in turn, on their absorptive capacity.

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Section: Results For Generalized Linear Models Regressionmentioning

confidence: 99%

Innovation in Emerging Markets: The Role of Absorptive Capacity and of the Insertion in the Local and Global Value Chains

Calegário

Bruhn

Figueira

et al. 2019

RAM, Rev. Adm. Mackenzie

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“…(1) The first is that they bring superior knowledge about foreign markets and certain technological properties that are their specific advantages, which allow them to compete with other MNEs and local firms that generally have a better knowledge of the local market and consumer preferences; and (2) The second reason is that the entry or presence of multinationals alters the existing market equilibrium, forcing local firms to become more efficient in protecting their market share and profits (Bruhn & Calegario, 2014;Blomström & Kokko, 1998).…”

Section: Foreign Direct Investment and Spillover Effectsmentioning

confidence: 99%

Foreign direct investment in developing economies

Bruhn

Calegário

Mendonça

2019

RAUSP

Self Cite

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Purpose The aim of this study was to investigate how the productivity spillover effects of foreign direct investment (FDI) in the Latin American economies are manifested. Specifically, the paper sought to identify the role of foreign presence and government intervention through an industrial policy on total factor productivity in Latin American countries. Design/methodology/approach The analyses in this study were performed in two stages. The first step consisted of decomposing the total factor productivity growth, in technical efficiency change (EC) and technological efficiency change (TC), using the Malmquist Productivity Index (MPI). In the second stage of this research, the specific EC and TC indexes of each country – obtained with the MPI – are used alternately as a dependent variable in a regression analysis with dynamic panel data. The variables were collected from the World Development Indicators database, available in the World Bank database, and cover the period from 1994 to 2014. Findings FDI has contributed to not only the catch-up effect – i.e. to continuous improvements in production processes and products using the same technology – but also in terms of productivity, due to technological innovations and the frontier-shift effect. Industrial policies, such as the FDI attraction, when established in isolation, are not able to contribute to the generation of productivity spillovers, measured in terms of technical and technological efficiency. Research limitations/implications The limitation of the present study lies precisely in the nature of data aggregation that actually limits a more in-depth analysis of the object of study. The available data set for the analysis in this study does not provide a detailed examination of the domestic corporations’ characteristics, the sectors and motivations of multinational corporations of each one of the analyzed economies. Practical implications The outcomes of this research present several practical implications, as its development is based on the recognition that productivity is essential for the development of a country. It remains the Achilles' heel of the Latin American economies, and therefore, it is necessary and essential to move toward a change in its development model and, more specifically, in its industrial policies, with a focus on investment and innovation to achieve the new sustainable development objectives. Among the main challenges presented to governments in the region is the emergence of policies aimed at establishing a sustainable development path through industrial policies capable of accelerating productivity growth. Social implications The evidence presented in this study highlights the importance of better understanding the real effects of state intervention through the use of industrial policy instruments and how they affect foreigners’ investment decisions, as the lack of clear industrial policy orientation that is systematically integrated with MNEs’ operations may result in economic development opportunities below the ideal. Originality/value The research results corroborate the foundations of spillover effects theory and with the recognition that the intensity of the effect of the foreign participation on the performance of economies will depend on the absorption capacity of host economies.

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“…In reality, both the choices as well as competition faced by firms could be much greater. Additionally, despite an inherent assumption of the eclectic model being that a foreign firm will be competitive against domestic firms in a chosen host country, it is possible for a domestic firm to benefit from positive spillover of productivity of a foreign firm (Bruhn and Calegario, 2014;Pham, 2012). However, we do not examine the effect of FDI decisions on domestic firms.…”

Section: Limitations and Future Researchmentioning

confidence: 99%

A game theoretic analysis of firms' entry mode decisions

Bae

Joardar

Sarkis

2016

IJOR

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Limited research has been completed using formal modelling to investigate a firm's entry mode decisions. Addressing this issue, we formulate Dunning's eclectic model as a game theoretic problem. We develop a novel three-stage game theory model to investigate the relationships and nuances of the core constructs of the eclectic model, i.e., ownership advantage, location advantage and internalisation (OLI). We develop an equilibrium solution to identify the optimal entry decisions for firms entering new markets using a two firm-two country scenario when parameters including ownership advantage of firms, market size, production cost and country risks are varied. The results obtained provide insight for future research as well as having significant practical implications.

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Productivity spillovers from foreign direct investment in the Brazilian processing industry

Cited by 10 publications

References 42 publications

Innovation in Emerging Markets: The Role of Absorptive Capacity and of the Insertion in the Local and Global Value Chains

Innovation in Emerging Markets: The Role of Absorptive Capacity and of the Insertion in the Local and Global Value Chains

Foreign direct investment in developing economies

A game theoretic analysis of firms' entry mode decisions

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