Business, Management and Accounting
5 years ago

Foreign investment boosts domestic productivity in the long run, study finds.

Economic Journal of Emerging Markets
The spillover effects of foreign direct investment on labor productivity
Riesta Karentina

Paper Summary

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The study looked at how foreign investment affects the productivity of local companies. They found that when foreign companies invest in the same industry as local ones, it can initially hurt productivity but eventually help. However, when foreign investment spills over to different industries, it tends to lower local companies' productivity. The study also showed that foreign investment has a positive impact on the productivity of local companies that rely heavily on capital.