PUBLICATIONS & REPORTS

Contents Introduction

This paper examines productivity spillovers derived from the existence of foreign multinational plants. The empirical evidence, first suggests the existence of positive spillovers. Second, results indicate that the extent of spillovers was positively related to the share of foreign-owned plants in employment. Third, the results suggest that the magnitude of spillovers tended to be smaller in industries where the share of majority-foreign plants was relatively large or industries where technological gaps between foreign- and locally-owned plants were relatively large. These results imply that encouraging foreign direct investment does not necessarily promote spillovers, especially in technologically backward industries.