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Journal of Economic Integration 2010 June;25(2) :298-323.
DOI: https://doi.org/10.11130/jei.2010.25.2.298
Foreign Direct Investment and Productivity Spillovers: the Experience of ASEAN Countries
Nathapornpan Piyaareekul Uttama and 
Nicolas Peridy 
Mae Fah Luang University
Université du Sud Toulon-Var
Copyright ©2010 Journal of Economic Integration
ABSTRACT

This paper aims at investigating the productivity spillover effects of FDI inflows to ASEAN countries. A first contribution is related to the development of an original theoretical model of complex multinational firms which simultaneously explores backward and forward linkages due to FDI. As a second contribution, the significance of vertical productivity spillovers in ASEAN countries is tested empirically. For that purpose, and given the lack of data at firm level, the causal relationship between FDI and productivity is investigated by using country-specific data. Several alternative causality tests are implemented, including both direct and indirect approaches. The main results give strong evidence that FDI causes productivity growth in ASEAN countries. These results correlate the prediction of the theoretical model, which provide a strong support for the relationship between FDI and productivity spillovers.

JEL Classification: F21

Keywords: ASEAN | FDI | Spillover Effects | Panel Data
 
REFERENCE
1. ASEAN Secretariat (1998), "Framework Agreement on the ASEAN Investment Area", [online], at http://www.aseansec.org/6466.htm
2. ASEAN Secretariat (2003), "Declaration of ASEAN Concord 2 (Bali Concord 2)", [online], at http://www.aseansec.org/15159.htm
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