Jacob A. Jordaan

Regional Foreign Participation and Externalities: New Empirical Evidence from Mexican Regions

Recent empirical research on externalities from foreign direct investment (FDI) is engaged with the identification of externalities along the dimensions of industry and geographical space. In this paper I explore these externality dimensions in the context of estimating FDI externalities in regional Mexican manufacturing industries. The main findings indicate that the presence of FDI creates a variety of externality effects. Intraregional foreign participation creates negative intraindustry and positive interindustry externalities. Furthermore, the estimations identify negative intraindustry externalities across regions and positive spatial interindustry FDI externalities. In addition, the estimations identify three different regional characteristics that have a negative or positive effect on spatial externalities from FDI.

HIV/AIDS in Russia: determinants of regional prevalence

BackgroundThe motivation for this paper is to inform the selection of future policy directions for tackling HIV/AIDS in Russia. The Russian Federation has more people living with HIV/AIDS than any other country in Europe, and nearly 70% of the known infections in Eastern Europe and Central Asia. The epidemic is particularly young, with 80% of those infected aged less than thirty, and no Russian region has escaped the detection of infections. However, measures to address the epidemic in Russia have been hampered by late recognition of the scale of the problem, poor data on HIV prevalence, potentially counterproductive narcotics legislation, and competing health priorities. An additional complication has been the relative lack of research into the spatial heterogeneity of the Russian HIV/AIDS epidemic, investigating the variety of prevalence rates in the constituent regions and questioning assumptions about the links between the epidemic and the circumstances of post-Soviet transformation. In the light of these recent developments, this paper presents research into the determinants of regional HIV prevalence levels in Russia.ResultsStatistical empirical research on HIV and other infectious diseases has identified a variety of factors that influence the spread and development of these diseases. In our empirical analysis of determinants of HIV prevalence in Russia at the regional level, we identify factors that are statistically related to the level of HIV prevalence in Russian regions, and obtain some indication of the relative importance of these factors. We estimate an empirical model that includes factors which describe economic and socio-cultural characteristics.ConclusionOur analysis statistically identifies four main factors that influence HIV prevalence in Russian regions. Given the different nature of the factors that we identify to be of importance, we conclude that successful HIV intervention policies will need to be multidisciplinary in nature. Finally, we stress that further research is needed to obtain a better understanding of the statistical relations that we have identified; our empirical findings can serve as an important guide in these future research efforts, as they indicate which processes play an important role in regional HIV/AIDS prevalence rates in contemporary Russia.

Cross-sectional estimation of FDI spillovers when FDI is endogenous: OLS and IV estimates for Mexican manufacturing industries

Cross-sectional estimates of Foreign Direct Investment (FDI) spillovers are biased when the variable capturing the cross-industry variation of foreign participation is endogenous to the estimated regression model. In this article I introduce an original instrument for this problematic FDI variable, capturing the general FDI intensity of manufacturing industries. I use this instrument to estimate FDI externalities in a cross-section of Mexican manufacturing industries. The main findings show that, in contrast to the common criticism that Ordinary Least Squares (OLS) estimation produces an upward bias in the estimated FDI externality effect, for the sample of Mexican manufacturing industries OLS estimation causes a downward bias. Controlling for the tendency among foreign manufacturing firms to gravitate towards low productivity industries, the instrumental variable estimations provide robust evidence of significantly larger positive FDI spillover effects.

Firm heterogeneity and technology transfers to local suppliers: Disentangling the effects of foreign ownership, technology gap and absorptive capacity

In this paper, I present novel microeconomic evidence on the effects of firm heterogeneity on the creation and impact of technology transfers from foreign direct investment (FDI) to local suppliers in a developing country setting. The main findings are threefold. First, FDI firms are significantly more involved in knowledge transfer activities than domestic producer firms. In particular, FDI firms offer more technological support, support with a direct positive impact on production processes of local suppliers. Second, the type of ownership also influences the effect of the technology gap on technology transfers. A large technology gap between a producer firm and its suppliers lowers the provision of support; however, FDI firms offer more technological support to their suppliers of material inputs when the technology gap is large. Independent of the support that the suppliers receive, foreign ownership of client firms and a large technology gap make it more likely that suppliers experience large positive impacts. Third, the level of absorptive capacity of local suppliers is also important for the impact of the technology transfers, confirming the notion that heterogeneity among both producer firms and local suppliers affect the level, nature and impact of local technology transfers.

Location, localisation, agglomeration: an examination of the geographical dimension of FDI spillovers

In this chapter we use firm-level data from the Greek manufacturing sector to identify how three features of economic geography – spatial heterogeneity, spatial proximity and spatial concentration – influence the size and sign of intra- and inter-industry FDI spillovers. We find that FDI spillovers predominantly materialise at the sub-national level, with horizontal spillovers being more prominent at the regional level and vertical spillovers being highly localised. Furthermore, we find important synergies between spillovers from FDI and industry- and region-specific agglomeration. Also, our findings show that FDI spillovers are conditional on regional characteristics related to a region’s manufacturing base, FDI concentration, urban agglomeration and aggregate productivity. These results highlight the important role played by geography for the materialisation of FDI productivity spillovers and suggest that these key geographical features ought to be taken into account both in the study of FDI spillovers and in the design of FDI-promotion and regional development policies.