Title: FDI and Export Spillovers through Horizontal and Vertical Linkages in South Korea Using Heckman’s Two Step Approach
Abstract: We investigate spillovers from inward foreign direct investment (FDI) on domestic firms’ export activity. Using firm-level data of South Korea’s manufacturing industries for the recent period of 2006-2009, this paper examines whether absorptive capacity of domestic firms matters for capturing the spillovers from FDI. In particular, horizontal (intraindustry) and vertical (inter-industry) spillovers from FDI are examined by using Heckman’s two-step estimation strategy to control for selection bias. This approach allows us to examine the impact of spillovers from horizontal and vertical linkages on the export intensity and the export market participation of domestic firms. We find that absorptive capacity seems to play an important role in capturing the positive spillovers from FDI; however, this result becomes less significant and inconsistent when the econometric concern of a potential endogeneity problem is considered in the regression. Therefore, this paper provides no clear empirical evidence of positive export spillovers from foreign presence and the role of absorptive capacity to capture the benefits from foreign multinationals.
Publication Year: 2013
Publication Date: 2013-08-01
Language: en
Type: article
Access and Citation
Cited By Count: 3
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