Discussion paper

DP18100 FDI and Superstar Spillovers: Evidence from firm-to-firm transactions

Despite competition concerns over the increasing dominance of global corporations,
many argue that productivity spillovers from multinationals to domestic firms justify pro-
FDI policies. For the first time, we use firm-to-firm transaction data in a developed country
to examine the impact of forming a new relationship with a multinational, and find a TFP
increase of about 8% three or more years after the event. Sales to other buyers, trade
and customer quality also increase. However, we also document that starting to supply
other “superstar firms” such as those who heavily export or are very large also increases
performance by similar amounts, even if the superstar is a non-multinational. Placebos on
starting relationships with smaller firms and novel identification strategies relying solely on
demand shocks to superstar firms support a causal interpretation. A model of technology
transfer rationalizes these effects and also correctly predicts (i) falls in post-event markups;
(ii) the type of firms who form superstar relationships and (iii) bigger treatment effects
from superstars intensive in R&D, IT and/or human capital. In addition to productivity
spillovers, we document the transmission of “relationship capabilities” and “dating agency”
effects as the increase in new buyers is particularly strong within the superstar firm’s
existing network. These results suggest an important role for raising productivity through
the supply chains of superstar firms regardless of their multinational status.


Amiti, M, C Duprez, J Konings and J Van Reenen (2023), ‘DP18100 FDI and Superstar Spillovers: Evidence from firm-to-firm transactions‘, CEPR Discussion Paper No. 18100. CEPR Press, Paris & London. https://cepr.org/publications/dp18100