Productivity spillovers from FDI in Turkey: Evidence from quantile regressions

Abstract

This paper, using firm-level data for Turkey’s manufacturing firms for the period 2003-2012, explores the role of firms’ absorptive capacity in determining the magnitude of possible benefits from FDI. The empirical analysis is based on conditional quantile regression to allow for different effects of FDI on firms located at different quantiles of productivity. This enables one to take better account of the large and persistent heterogeneity in productivity dynamics across firms. The empirical evidence reveals that absorptive capacity plays an important role in capturing the positive productivity spillovers from FDI, especially for the firms that have medium and high TFP growth rates.

Keywords

• foreign direct investment
• productivity spillovers
• absorptive capacity
• quantile regressions