Browsing by Subject "FDI spillovers"

Now showing 1 - 2 of 2

Open Access
Does foreign direct investment promote growth? Exploring the role of financial markets on linkages
(Elsevier BV, 2010) Alfaro, L.; Chanda, A.; Ozcan, S. K.; Sayek, S.
Do multinational companies generate positive externalities for the host country? The evidence so far is mixed varying from beneficial to detrimental effects of foreign direct investment (FDI) on growth, with many studies that find no effect. In order to provide an explanation for this empirical ambiguity, we formalize a mechanism that emphasizes the role of local financial markets in enabling FDI to promote growth through backward linkages. Using realistic parameter values, we quantify the response of growth to FDI and show that an increase in the share of FDI leads to higher additional growth in financially developed economies relative to financially under-developed ones. © 2009 Elsevier B.V. All rights reserved.
Open Access
MNEa and wages: the role of productivity spillovers and imperfect labor markets
(Elsevier BV, 2011) Saglam, B. B.; Sayek, S.
Disentangling the labor market implications of increased foreign capital flows remains important. This paper provides a unifying framework allowing to study the wage implications of multinational enterprise (MNE) activities, pointing to the importance of controlling for both labor market imperfections and productivity spillovers from foreign to local firms. Results show that increased MNE activities increase average wages in the local economy while contributing to a larger wage dispersion between the MNE and local firms. While the results pertaining to average wages depends heavily on the frictions in the labor market, how much the wage dispersion alters also depends on the extent of productivity spillovers from the MNEs to the local firms and the complementarity between domestic and foreign capital. (C) 2011 Elsevier B.V. All rights reserved.