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Foreign Direct Investment and Technology Spillovers in the Turkish Manufacturing Industry

Author

Listed:
  • Alper Sönmez

    (Department of Economics, Middle East Technical University)

  • M. Teoman Pamukçu

    (TEKPOL, Science and Technology Policy Studies, Middle East Technical University)

Abstract
Technology spillovers from foreign to domestic firms in emerging economies are considered to be the most important channel through which Foreign Direct Investment (FDI) influence the host economy. Empirical evidence about the existence, magnitude and direction of FDI-related spillovers in these countries is contradictory pointing to the necessity of conducting more econometric studies using firm-level data. We conduct an econometric analysis to assess the impact of FDI-related horizontal technology spillovers on output growth of domestic firms in the Turkish manufacturing industry over 2003-2006. When a broad definition of foreign ownership is adopted, our findings suggest that horizontal spillovers occur from foreign to local firms in the sector of activity. Export-oriented firms do not benefit from these spillovers in contrast to firms producing mainly for the domestic market. However, when foreign ownership is defined according to whether the minority or majority of capital is detained by the foreign partner, horizontal spillovers seem to originate from foreign firms with majority or full foreign ownership while no such effect is associated with minority-owned foreign firms.

Suggested Citation

  • Alper Sönmez & M. Teoman Pamukçu, 2011. "Foreign Direct Investment and Technology Spillovers in the Turkish Manufacturing Industry," STPS Working Papers 1103, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised Mar 2011.
    • Handle: RePEc:met:stpswp:1103
    as

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    File URL: http://www.stps.metu.edu.tr/sites/stps.metu.edu.tr/files/1103_0.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Foreign Direct Investment (FDI); multinational corporations; foreign ownership; productivity; technology spillovers; knowledge spillovers; horizontal spillovers; Turkey.;
    All these keywords.

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