Local Intermediate Inputs and the Shared Supplier Spillovers of Foreign Direct Investment [electronic resource] / Kee, Hiau Looi
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TextPublication details: Washington, D.C., The World Bank, 2014Description: 1 online resource (62 p.)Subject(s): E-Business | Economic Theory & Research | Foreign Direct Investment | Intermediate Inputs | Labor Policies | Local Suppliers | Macroeconomics and Economic Growth | Markets & Market Access | Multi-Product Firms | Private Sector Development | Product Scope | Productivity | Shared Supplier Spillovers | Social Protections and Labor | Water & Industry | Water ResourcesAdditional physical formats: Kee, Hiau Looi: Local Intermediate Inputs and the Shared Supplier Spillovers of Foreign Direct Investment.Online resources: Click here to access online Abstract: Trade liberalizations have been shown to improve domestic firms' performance through the new varieties of imported intermediate inputs. This paper uses a unique, representative sample of Bangladeshi garment firms to highlight that local intermediate inputs may also enhance domestic firms' performance, through the shared supplier spillovers of foreign direct investment (FDI) firms. An exogenous EU trade policy shock is shown to cause some FDI firms in Bangladesh to expand, which led to better performance of the domestic firms that shared their suppliers. Overall, the shared supplier spillovers of FDI explain 1/4 of the product scope expansion and 1/3 of the productivity gains within domestic firms.
Trade liberalizations have been shown to improve domestic firms' performance through the new varieties of imported intermediate inputs. This paper uses a unique, representative sample of Bangladeshi garment firms to highlight that local intermediate inputs may also enhance domestic firms' performance, through the shared supplier spillovers of foreign direct investment (FDI) firms. An exogenous EU trade policy shock is shown to cause some FDI firms in Bangladesh to expand, which led to better performance of the domestic firms that shared their suppliers. Overall, the shared supplier spillovers of FDI explain 1/4 of the product scope expansion and 1/3 of the productivity gains within domestic firms.
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