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Product Sophistication and Spillovers from Foreign Direct Investment

  • Stephan Huber
Chapter
Part of the Contributions to Economics book series (CE)

Abstract

FDI in developing countries is often associated with higher economic growth due to knowledge and technology spillovers to local firms. One way that FDI speed up growth is by facilitating the manufacturing of more sophisticated products by local firms. So far, there is a lack of firm-level evidence how the presence of multinational firms affects the product sophistication of firms in a developing country. This chapter aims to fill this gap. We compile an extensive firm-product-level data set of Indian firms with information on product sophistication and spillovers from FDI in order to explore different channels through which spillovers from multinationals to local Indian firms foster the manufacturing of sophisticated products. We find that spillovers through supplier linkages strongly increase the manufacturing of sophisticated products in India.

Notes

Acknowledgements

I thank the Bavarian Graduate Program in Economics, and LMU Mentoring for financial support. I also thank Matthias Wilhelm, who provided excellent research assistance. I am grateful to Vanessa Alviarez, Robert Feenstra, Richard Frensch, Daniel Heuermann, Evzen Kocenda, Xenia Matschke, Joachim Möller, Katrin Peters, Katheryn Russ, Dieter Sadowski, Monika Schnitzer, Deborah Swenson, Farid Toubal, and Eric Verhoogen, as well as all seminar and conference participants for their helpful comments and suggestions. The usual disclaimer applies.

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Stephan Huber
    • 1
  1. 1.Fachbereich WirtschaftswissenschaftUniversity of RegensburgRegensburgGermany

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