CEU Electronic Theses and Dissertations, 2017
| Author | Bisztray, Márta |
|---|---|
| Title | Indirect effects of international investment and trade |
| Summary | In my thesis I look at the indirect effects of international investment and trade. There are several well-known direct effects: foreign direct investment (FDI) creates new workplaces and increases tax revenue; trade increases both the market for domestic goods and the scope of goods available for local buyers. There is also evidence in the literature showing that exporting and importing firms become more productive. At the same time indirect effects are less trivial, though these can also be important. On one hand, indirect effects like knowledge spillovers or increased demand can benefit other local firms. On the other hand, competition for local inputs might also become higher. The three chapters of my thesis examine some of these indirect effects, both looking at their magnitude and the mechanism behind. In all three chapters I do an empirical analysis, using Hungarian firm-level panel data. In the first chapter I look for vertical FDI spillovers. Taking the large-scale investment of Audi in Hungary I find that local firms operating in the supplier industry increased their sales and employment after the Audi entry, which is in line with a local demand effect, but there is no evidence for increased productivity. Moreover, the demand effect is driven by firms with foreign owners, which might be the result of the large productivity gap between the domestic firms and Audi. In the second chapter I estimate the local spillovers of FDI exits. I find that sales and employment of local firms decreased after the closure of a foreign-owned large plant located nearby. I also provide evidence showing that decreased competition for local labor, decreased local purchasing power of the laid-off, and lost demand for local suppliers are all important channels in the plant closure effect. The third chapter is a joint work with \'{A}d\'{a}m Szeidl and Mikl\'{o}s Koren. We estimate import spillovers, finding that peers with country-specific trade experience increase the probability of starting to import from a country. This effect is even stronger if the peer operates in the same industry or imported the same product before. In my thesis I document several types of indirect effects of FDI and international trade. I show the existence of spillovers from an FDI to the supplier industry (chapter 1 and 2) and to the local service industry (chapter 2), and provide evidence for knowledge spillovers in imports (chapter 3). Additionally, I show that spillovers are specific to certain firm groups. All the three chapters suggest that spillovers are localized in space. Knowledge spillovers are especially concentrated in close neighborhoods. Spillovers are the strongest for firms in related industries: firms in the supplier industry of the foreign direct investment or same-industry peers of the importer firms. Finally, spillovers also depend on initial firm performance. Better firms tend to gain more after an FDI entry or learn more from experienced peers. Worse firms tend to lose more after an FDI exit. |
| Supervisor | Szeidl, Adam |
| Department | Economics PhD |
| Full text | https://www.etd.ceu.edu/2017/bisztray_marta.pdf |
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