Multinational companies and productivity spillovers: is there a specification error?

Castellani, D. and Zanfei, A. (2007) Multinational companies and productivity spillovers: is there a specification error? Applied Economics Letters, 14 (14). pp. 1047-1051. ISSN 1350-4851 doi: 10.1080/13504850600706503

Abstract/Summary

Recent empirical works on the within-sector impact of inward investments on domestic firms’ productivity have found rather robust evidence of no (or even negative) effects. We suggest that, among other reasons, a specification error might explain some of these results. A more general specification, which includes the usual one as a special case, is proposed. Using data on Italian manufacturing firms in 1992–2000, we find positive externalities only once we allow for the more flexible specification.