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Essays on foreign direct investment and globalization
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Essays on foreign direct investment and globalization
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Li
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Yue
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Yue Li
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Prusa
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Thomas
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Thomas J. Prusa
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chair
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Klein
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Roger
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Roger Klein
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Altshuler
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Rosanne
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Rosanne Altshuler
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Javorcik
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Beata
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Advisory Committee
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Beata S. Javorcik
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Rutgers University
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Graduate School - New Brunswick
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theses
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2008
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2008-10
Language
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English
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electronic
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ix, 181 pages
Abstract
This dissertation is composed of three essays investigating the implications of foreign direct investment (FDI) inflows for developing countries and the forces driving such flows.
Lately, many economies have been opening their retail sector to FDI, yet little is known about possible implications of such liberalization. In Chapter 2, using data from Romania, I look at how the presence of global retail chains affects the supplying industries. I show that the subsidiaries of global chains are larger in size, more capital intensive and exhibit higher labor productivity than other retailers. I then apply a difference-in-differences method and find that the expansion of global chains leads to a significant increase in TFP in the supplying industries. These results suggest that the opening of the retail sector to FDI may stimulate productivity growth in upstream manufacturing.
Existing studies have focused on productivity spillovers from FDI postulating a constant marginal effect. In Chapter 3, I use markup as an alternative measure of firm performance, exploring multiple dimensions of the impact of FDI, and examine the possibility that marginal spillovers diminish. Using Romanian data, I find that the relationship between downstream FDI and upstream markups is in the shape of an inverse-U, i.e. at some critical value of FDI, the marginal effect turns from positive to negative; the intra-industry impact of FDI is weak but, when considering companies with minority foreign ownership, the relationship is also inverse-U shaped. My findings support the idea of diminishing marginal spillovers, which advance current belief on positive vertical spillovers and offers an explanation to the ambiguous evidence on horizontal spillovers.
International vertical integration is an important reason behind the growth in FDI, yet little evidence is available on why it varies across industries. In Chapter 4, I examine the theory of Antras and Helpman and provide an empirical answer to the question. My approach takes advantage of the correspondence between the pattern of international investment and that of trade in intermediates. I show that productivity dispersion and input intensities influences an industry's propensity to import intermediates from developing countries and, hence, the extent of vertical integration.
Lately, many economies have been opening their retail sector to FDI, yet little is known about possible implications of such liberalization. In Chapter 2, using data from Romania, I look at how the presence of global retail chains affects the supplying industries. I show that the subsidiaries of global chains are larger in size, more capital intensive and exhibit higher labor productivity than other retailers. I then apply a difference-in-differences method and find that the expansion of global chains leads to a significant increase in TFP in the supplying industries. These results suggest that the opening of the retail sector to FDI may stimulate productivity growth in upstream manufacturing.
Existing studies have focused on productivity spillovers from FDI postulating a constant marginal effect. In Chapter 3, I use markup as an alternative measure of firm performance, exploring multiple dimensions of the impact of FDI, and examine the possibility that marginal spillovers diminish. Using Romanian data, I find that the relationship between downstream FDI and upstream markups is in the shape of an inverse-U, i.e. at some critical value of FDI, the marginal effect turns from positive to negative; the intra-industry impact of FDI is weak but, when considering companies with minority foreign ownership, the relationship is also inverse-U shaped. My findings support the idea of diminishing marginal spillovers, which advance current belief on positive vertical spillovers and offers an explanation to the ambiguous evidence on horizontal spillovers.
International vertical integration is an important reason behind the growth in FDI, yet little evidence is available on why it varies across industries. In Chapter 4, I examine the theory of Antras and Helpman and provide an empirical answer to the question. My approach takes advantage of the correspondence between the pattern of international investment and that of trade in intermediates. I show that productivity dispersion and input intensities influences an industry's propensity to import intermediates from developing countries and, hence, the extent of vertical integration.
Note
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Ph.D.
Note
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Includes bibliographical references (p. 172-180).
Subject
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Topic
Economics
Subject
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Topic
Investments, Foreign--Developing countries
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International business enterprises
Subject
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Topic
Economic development
Subject
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Topic
Globalization--Economic aspects--Developing countries
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Graduate School - New Brunswick Electronic Theses and Dissertations
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doi:10.7282/T3ZP46FH
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ETD doctoral
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Yue Li
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Rutgers University. Graduate School - New Brunswick
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I hereby grant to the Rutgers University Libraries and to my school the non-exclusive right to archive, reproduce and distribute my thesis or dissertation, in whole or in part, and/or my abstract, in whole or in part, in and from an electronic format, subject to the release date subsequently stipulated in this submittal form and approved by my school. I represent and stipulate that the thesis or dissertation and its abstract are my original work, that they do not infringe or violate any rights of others, and that I make these grants as the sole owner of the rights to my thesis or dissertation and its abstract. I represent that I have obtained written permissions, when necessary, from the owner(s) of each third party copyrighted matter to be included in my thesis or dissertation and will supply copies of such upon request by my school. I acknowledge that RU ETD and my school will not distribute my thesis or dissertation or its abstract if, in their reasonable judgment, they believe all such rights have not been secured. I acknowledge that I retain ownership rights to the copyright of my work. I also retain the right to use all or part of this thesis or dissertation in future works, such as articles or books.
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