AIB 2012 Conference Proceedings - Academy of International ...

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Do the Biggest Aisles Serve a Brighter Future Global Retail Chains and Their Implications for Romania
Yue Li, World Bank
Beata Javorcik, University of Oxford and CEPR
During the past two decades many countries have opened their retail sector to foreign direct investment, yet
little is known about the implications of such liberalization for the economies of host countries. Using a unique
dataset combining outlet-specific information on global retail chains with a panel of Romanian manufacturing
firms, this study sheds some light on this question. The results from the difference-in-difference analysis
suggest that the expansion of global retail chains led to a significant increase in the total factor productivity in
the supplying industries. Their presence in a region raised the total factor productivity of firms in the supplying
industries by 3.8 to 4.7 percent, while doubling the number of chains led to an increase of 3.3 to 3.7 percent.
The conclusions are robust to a variety of specifications and supported by the survey evidence. These findings
suggest that the opening of the retail sector to foreign direct investment may stimulate productivity growth in
manufacturing industries through backward linkages, and they provide another piece of evidence in favor of
services liberalization. (For more information, please contact: Yue Li, World Bank, USA: yli7@worldbank.org)
Bi-Directional Technology Spillovers between Foreign and Local Firms: Empirical Evidence from an Emerging
Economy
Gerald Yong Gao, University of Missouri-St. Louis
Yao Amber Li, Hong Kong University of Science and Technology
Min Ju, University of Missouri-St. Louis
We examine the bi-directional technology spillovers between foreign and local firms. Extending the literature of
FDI spillovers, we focus on new product development as the non-productivity spillovers outcome and further
investigate the possible reverse spillovers effect from local to foreign firms. Moreover, we test whether the
effect of technology spillovers is contingent on firm geography. Based on a seven-year panel data of
manufacturing firms in China, we find strong evidence of the two-way technology spillovers. Interestingly,
geographic proximity positively moderates the technology spillovers from foreign on local firms, but it has no
effect on local firms' spillovers on foreign firms. (For more information, please contact: Gerald Yong Gao,
University of Missouri-St. Louis, USA: gaogy@umsl.edu)
A Non-Linear Model of Technological Spillovers from Foreign Direct Investment (FDI): A Comparison between
Horizontal and Vertical Spillovers
Yoo Jung Ha, University of Manchester
Axèle Giroud, University of Manchester
This research investigates the non-linear form of backward and forward spillovers. To our knowledge, we
present the first findings about the non-linear relationship of backward and forward spillovers with local firm
performance. We demonstrate that the relationship of horizontal spillovers and backward spillovers with local
firm performance occurs in an inverted-U shape, respectively. Forward spillovers are positive overall and marked
by a constant marginal rate of incidence, and thus occurring almost proportionately with rising inward MNE
investments. Based on empirical evidences, we propose a conceptual model where factors of curvilinear learning
curve are fixed costs and marginal costs of learning. In other words, backward spillovers are underscored by
low fixed costs and rising marginal costs of learning, while forward spillovers are underscored by relatively high
fixed costs and constant marginal costs of learning. (For more information, please contact: Yoo Jung Ha,
University of Manchester, United Kingdom: y.j.ha@sant.oxon.org)
AIB 2012 Conference Proceedings
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