Outward FDI and Productivity: Panel Granger-Causality Evidence for Taiwan Manufacturing Firms

Huang, Chia-Hui; Hou, Tony Chieh-tse

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Outward FDI and Productivity: Panel Granger-Causality Evidence for Taiwan Manufacturing Firms

The Empirical Economics Letters, Vol. 10, No. 12, pp. 1259-1264, 2011

6 Pages Posted: 9 Jan 2013

See all articles by Chia-Hui Huang

Tony Chieh-tse Hou

National Dong Hwa University

Date Written: January 8, 2013

Abstract

This study investigates the direction of Granger causality between outward foreign direct investment (OFDI) and firm’s total factor productivity (TFP). Using a dataset of 347 large enterprises listed on the Taiwan Stock Exchange over the period 1997-2005, the result shows a one-way causality from OFDI to TFP, which supports post-FDI effect. Furthermore, this finding is stronger in non-electronic industries than in electronic industries. It indicates the reallocation effect on productivity induced by FDI in non-electronic industries is stronger than the learning effect on productivity induced by FDI in electronic industries.

Keywords: outward FDI, productivity, granger causality

JEL Classification: F210, L200

Suggested Citation: Suggested Citation

Huang, Chia-Hui and Hou, Tony Chieh-tse, Outward FDI and Productivity: Panel Granger-Causality Evidence for Taiwan Manufacturing Firms (January 8, 2013). The Empirical Economics Letters, Vol. 10, No. 12, pp. 1259-1264, 2011, Available at SSRN: https://ssrn.com/abstract=2197659