NEW AND IMPROVED: DOES FDI BOOST PRODUCTION COMPLEXITY IN HOST COUNTRIES?

This article examines the relationship between the presence of foreign affiliates and product upgrading by Turkish manufacturing firms. The analysis suggests that Turkish firms in sectors and regions more likely to supply foreign affiliates tend to introduce more complex products, where complexity i...

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Bibliographic Details
Published in:The Economic journal (London) 2018-09, Vol.128 (614), p.2507-2537
Main Authors: Javorcik, Beata S., Turco, Alessia Lo, Maggioni, Daniela
Format: Article
Language:English
Subjects:
Bias
Economic theory
Foreign investment
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Summary:This article examines the relationship between the presence of foreign affiliates and product upgrading by Turkish manufacturing firms. The analysis suggests that Turkish firms in sectors and regions more likely to supply foreign affiliates tend to introduce more complex products, where complexity is captured using a measure developed by Hidalgo and Hausmann (2009). This finding is robust to controlling for omitted variables, sample selection and potential simultaneity bias. It is also in line with the view that inflows of foreign direct investment stimulate upgrading of indigenous production capabilities in host countries.
ISSN:0013-0133
1468-0297
DOI:10.1111/ecoj.12530