The competition effect of cross-border capital movement and domestic
spillovers of FDI
Partner responsible: UNOTT
The objectives are sixfold:
To provide a comprehensive review of the potential channels via
which spillovers can be generated;
To evaluate the relationship between host country characteristics
and absorptive capacity;
To assess the impact of inward investment in the adjustment of the
To review the evidence on spillovers from FDI in the transition
To estimate a range of models designed to identify spillovers from
To evaluate the policy implications of spillovers for economic catch-up
in the transition economies.
Workpackage 2 will involve both qualitative and quantitative analysis;
some elements will be desk based, some will involve fieldwork. The
project will involve the following tasks:
The existing literature on the motivation for FDI and the effects of
FDI on the host country will be surveyed to provide a background for
the empirical work.
Coordination and harmonisation of existing firm/plant level databases
to analyse the effects of FDI on different host countries for both
developed and transition economies. For other countries further
firm/plant level data will have to be collected.
Empirical analysis of the determinants of FDI, paying particular
attention to differences between transition and developed countries.
This part of the workpackage will use firm/plant, sector and/or country
level data as available, which will be analysed using panel data
The focus here is on whether domestic firms benefit from the presence
of foreign firms through increasing productivity, and whether FDI is a
substitute or complement for imports in the host country.
Cross-country comparisons between developed and transition economies
will be carried out.