Downstream Foreign Direct Investment and U.s. Manufacturing Productivity
نویسنده
چکیده
This paper examines how an industry’s productivity is changed by inward FDI occurring in affiliated downstream industries those buying from the focal industry. While controlling for FDI into the focal industry, I find that FDI in downstream industries has a significant negative influence on U.S. manufacturing industries in 1987-1991. Downstream FDI reduces productivity by lowering the demand for output, which raises firms’ average costs. This negative productivity influence is relatively large. When focal and downstream FDI increase similarly, the resulting productivity outcome for the focal industry is negative. JEL classification: F23, L10, O19
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