Heterogeneous FDI in Transition Economies - A Novel Approach to Assess the Developmental Impact of Backward Linkages

Axèle Giroud, Björn Jindra, Philipp Marek

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Abstract

Traditional models of technology transfer via FDI rely upon technology gap and absorptive capacity arguments to explain host economies' potential to benefit from technological spillovers. This paper emphasizes foreign affiliates' technological heterogeneity. We apply a novel approach differentiating extent and intensity of backward linkages between foreign affiliates and local suppliers. We use survey data on 809 foreign affiliates in five transition economies. Our evidence shows that foreign affiliates' technological capability, embeddedness and autonomy are positively related to knowledge transfer via backward linkages. In contrast to what is widely assumed, we find a non-linear relationship between extent of local sourcing and knowledge transfer to domestic suppliers. © 2012.
Original languageEnglish
Pages (from-to)2206-2220
Number of pages14
JournalWorld Development
Volume40
Issue number11
DOIs
Publication statusPublished - Nov 2012

Keywords

  • Backward linkages
  • Central and Eastern Europe
  • FDI
  • Multinational enterprises
  • Spillovers
  • Transition economies

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