Productivity Spillovers from FDI in Malaysian Manufacturing: Evidence from Micro-panel Data *
Noor Aini Khalifah
Using an establishment-level panel dataset for the Malaysian manufacturing industries for 2000-2004, we argue that differences in the proxies and degrees of foreign shareholdings in measuring foreign presence lead to opposite signs and/or significance of spillover effects. The results show significant evidence of positive productivity spillovers to local establishments in the same industry, based on a broad measure of foreign presence. However, there is no evidence of positive spillover when employment share is used as a proxy for foreign presence. Furthermore, significant negative spillover effects are related to higher employment shares of wholly foreign-owned establishments. Although there is no significant difference in labor productivity between wholly foreign-owned and locally-owned establishments, both majority and minority foreign-owned establishments have significantly lower levels of labor productivity than locally-owned establishments in Malaysia. Copyright 2009 The Authors. Journal compilation 2009 East Asian Economic Association and Blackwell Publishing Ltd.
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