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Discussion Paper Details

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Title: New and Improved: Does FDI Boost Production Complexity in Host Countries?

Author(s): Beata Javorcik, Alessia Lo Turco and Daniela Maggioni

Publication Date: March 2017

Keyword(s): Backward Linkages, FDI, Product Innovation, Production Upgrading and Turkey

Programme Area(s): International Trade and Regional Economics

Abstract: This paper 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 Hausmann and Hidalgo (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.

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Bibliographic Reference

Javorcik, B, Lo Turco, A and Maggioni, D. 2017. 'New and Improved: Does FDI Boost Production Complexity in Host Countries?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11942