آیا مهم است که شما از کجا آمده اید؟ سرریز عمودی از سرمایه گذاری مستقیم خارجی و منشاء سرمایه گذاران

This study uses firm-level panel data from Romania to examine whether the origin of foreign investors affects the degree of vertical spillovers from FDI. Investors' origin may matter for spillovers to domestic producers supplying intermediate inputs in two ways. First, the share of intermediates sourced locally by multinationals is likely to increase with the distance between the host and the source economy. Second, the sourcing pattern is likely to be affected by preferential trade agreements. In this case, the Association Agreement between Romania and the European Union (EU) implies that inputs sourced from the EU are subject to a lower tariff than inputs sourced from the United States or Canada. This means that on average American investors may have a greater incentive than EU investors to source from Romania and hence present a greater potential for vertical spillovers. The empirical analysis produces evidence consistent with this hypothesis. The results show a positive association between the presence of American companies in downstream sectors and the productivity of Romanian firms in the supplying industries and no significant relationship in the case of European affiliates. The results also indicate that Romanian firms in sectors whose products are expensive to transport benefit more from downstream presence of American affiliates than Romanian firms in sectors with low shipping costs. No such pattern is found for European affiliates.

Many countries strive to attract foreign direct investment (FDI) by offering ever more generous incentive packages and justifying their actions with the expected knowledge externalities to be generated by foreign affiliates. While the empirical literature searching for FDI spillovers taking place within sectors has produced mixed results in a developing country context1, the emerging consensus is that spillovers are more likely to take place through contacts between domestic firms and their multinational customers operating in the same country. Javorcik, 2004 and Blalock & Gertler, 2008 provide evidence consistent with the presence of positive FDI spillovers working through this channel in Lithuania and Indonesia, respectively.2 Despite being hugely important to public policy, factors affecting the existence of such externalities are rather poorly understood. In particular, relatively little attention has been paid to how characteristics of FDI projects matter for the extent of vertical spillovers. This study uses a large panel data set on firms operating in Romania to examine a link between the origin of foreign investors and the degree of vertical spillovers associated with their investment projects. Such a link is likely to exist for three reasons. First, as the theoretical models of vertical linkages predict, the share of intermediate inputs sourced by multinationals in a host country is positively correlated with the distance between the headquarters and the production facilities in the host country (Rodriguez-Clare, 1996 and Markusen & Venables, 1999).3 A larger share of local sourcing in turn implies more interactions between multinationals and local firms in upstream sectors and a greater potential for knowledge spillovers.4 Therefore, in the context of Romania we would expect a higher degree of vertical spillovers to be associated with American investors than with European multinationals, since home countries of the former are located farther away from Romania. Second, preferential trade agreements that cover some but not all investors' home countries are likely to affect the sourcing patterns of foreign affiliates. For example, as Romania signed the Association Agreement with the European Union (EU), its tariffs on imports from the EU are much lower than tariffs on imports from the US or Canada. In 1999, the average tariff applied by Romania to manufacturing imports from the US was 15.78% whereas the corresponding tariff on imports from the EU was only 4.88%.5 Given this tariff differential, it is much more costly for American affiliates relative to their European counterparts to bring inputs from the home country. Third, multinationals using Romania as an export platform can enjoy preferential (or even duty-free) access to the EU market provided that a sufficient share of value in their product was added within the area covered by the Agreement. This implies that while for European investors intermediate inputs purchased from home country suppliers comply with the rules of origin, this would not be the case for home country suppliers of American multinationals. Therefore, we expect that American investors would have a greater incentive to source locally and thus their presence would be associated with greater knowledge spillovers to Romanian firms in the supplying sectors.6 Anecdotal evidence also suggests that investors' origin may indeed affect the extent of local sourcing in Eastern Europe. For instance, when a US investor, General Electric, took over a Hungarian light-source producer, Tungsram, it retained local content of the production above 60% (Newton Holding, 2003). Likewise, Procter & Gamble Romania “has developed close relations with Romanian suppliers and has helped them grow and improve production quality” (Rompres, 21 October 2004).7 On the other hand, after a German company, Volkswagen, invested in Skoda Motor Company in the Czech Republic, it drastically reduced the number of suppliers. The company explicitly stated that it wished to concentrate on only ten suppliers that would provide sub-assemblies (Martin, 1998). Similarly, when the French multinational, Renault, purchased an equity stake in Dacia, the Romanian car maker, in 1999, it promised to continue sourcing inputs from local suppliers provided they lived up to its expectations. This, however, does not seem to have been the case. In 2002, eleven foreign suppliers of the French group were expected to start operating in Romania, thus replacing the Romanian producers from whom Dacia used to source.8 To test our hypothesis we relate the total factor productivity (TFP) of Romanian manufacturing firms to proxies for the presence of foreign affiliates from different regions of the world in downstream industries. Our sample includes information on 13,389 Romanian firms with sufficiently complete information to allow us to estimate their TFP. These firms operate in 52 manufacturing industries. Our data is an unbalanced panel covering the period 1998–2003. The data are obtained from a commercial database Amadeus. TFP is derived from production functions estimated separately for each of the 52 manufacturing industries using two approaches: a log-linear Cobb–Douglass specification and the semi-parametric method suggested by Ackerberg, Caves and Frazer (2006) which corrects for the simultaneity between productivity shocks and input choices. A unique feature of the Amadeus database is the availability of detailed information on firm ownership structure, including the country of origin of each shareholder. Thus we are able to calculate proxies for foreign presence in downstream sectors separately for European and American affiliates. These proxies are based on information about foreign affiliates in all sectors, not just manufacturing industries. Our results can be summarized as follows. We find a statistically significant and positive association between the presence of American companies in downstream sectors and the productivity of Romanian firms in the supplying industries. There is no indication, however, that the productivity of Romanian firms is affected by operations of European investors in downstream industries. The difference between the two effects is statistically significant. These results are robust to using different cut-offs to define foreign affiliates, to conducting the analysis at the regional level and to long differencing. To eliminate the possibility that the results are driven by differences in sophistication levels between foreign affiliates of different origin, we show that the results are robust to controlling for the productivity level of foreign investors relative to their Romanian counterparts.9 We also demonstrate that there is no statistically significant difference in productivity levels of American and European investors. If the differences we find in the data are attributable to a greater involvement in local sourcing by American investors, then we should observe that vertical spillovers from American FDI are larger in sectors with higher transport costs. In other words, Romanian firms in sectors producing goods that are expensive to transport should benefit more from downstream presence of American affiliates. As we show in our analysis, this is indeed the case. Spillovers from American FDI are larger in the supplying industries whose products are more costly to transport. No such pattern is found for European FDI. This result is robust to using several measures of transport costs. We conclude that the patterns observed in the data are consistent with our hypothesis that FDI inflows from far away source countries which are not part of the preferential trade agreement are more likely to be associated with local sourcing and thus lead to vertical productivity spillovers taking place through contacts with local suppliers of intermediate inputs. Although one may be tempted to advise the Romanian investment promotion agency to focus on attracting American FDI, we will stop short of doing so. Benefiting from knowledge spillovers is only of the reasons why countries wish to attract FDI (employment creation, tax revenues being among other potential reasons). Thus it would not be prudent to make policy recommendations without considering all of the effects FDI presence has on the host country. This paper is structured as follows. In the next section, we briefly discuss FDI inflows into Romania. Then we present our data, estimation strategy and the empirical results. The last section concludes.

This study uses a firm-level panel data set from Romania to examine whether the origin of foreign investors affects the degree of vertical spillovers from FDI. Foreign investors' country of origin may matter for spillovers to domestic producers in upstream sectors (supplying intermediate inputs) in several ways. First, the share of intermediate inputs sourced by multinationals from a host country is likely to increase with the distance between the host and the source economy. Second, preferential trade agreements of which some but not other investors are members are also likely to affect the sourcing patterns of foreign affiliates. In our case, the Association Agreement signed between Romania and the EU implies that inputs sourced from the European Union are subject to lower tariffs than those purchased from the US or Canada. Further, while for European investors intermediate inputs sourced from home country suppliers comply with the rules of origin and thus products in which they are incorporated can be exported to the EU on preferential terms, this would not be the case for home country suppliers of American multinationals. Therefore, while for European investors the benefits of volume discounts stemming from using parent company's suppliers in the home country are likely to outweigh the import costs, and the opposite is likely to be the case for American investors. For this reason, we expect that American investors have on average a greater incentive to source inputs in Romania than do European multinationals. A larger share of local sourcing implies more contacts between multinationals and Romanian firms in upstream sectors and thus a greater potential for knowledge spillovers. Thus our hypothesis is that (relative to European FDI) American investment is likely to be associated with greater knowledge spillovers to Romanian firms in the supplying industries. Our empirical analysis produces evidence in support of this hypothesis. We find a statistically significant and positive association between the presence of American companies in downstream sectors and the productivity of Romanian firms in the supplying industries. The data also indicate that operations of European investors in downstream sectors are not correlated with the productivity of Romanian firms in the supplying industries. The differences between the effects stemming from investors of different origin are statistically significant. More importantly, we find that the different extent of vertical spillovers associated with American and European FDI is systematically related to sector-specific transport costs. Romanian firms in sectors whose products are expensive to transport benefit more from downstream presence of American FDI than other firms. In the case of European FDI, the magnitude of spillovers to the supplying sectors is not systematically related to the shipping costs. We conclude that the observed pattern is consistent with our hypothesis that FDI inflows from far away source countries are more likely to be associated with positive vertical spillovers. Thus in sum, the origin of foreign investors does seem to matter for FDI spillovers.