Do Domestic Firms Learn to Export from Foreign-Owned Firms? Evidence from Kenya
Date
2020-12-10
Authors
Kinuthia, Bethuel Kinyanjui
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
Attracting inflows of foreign direct investment (FDI) has been a major concern of most
governments in developing countries. FDI is believed to bring many benefits to the
host countries in terms of productivity, employment, and technology, among other
benefits. This paper investigates the existence of export spillovers in Kenya for the
period 2000-2005 using firm level panel data. More specifically, the paper analyses
export spillovers in the manufacturing industry and the channels of transmission of
such spillovers. Using a linear probability fixed effects model, the results show that
foreign-owned firms may positively affect the decision of domestic firms to export
through the demonstration effects. However, FDI could result in negative spillovers
through the competition effects. There is also evidence of self-selection, where
only the most productive firms venture into the export market. Therefore, policies
aimed at encouraging firms increase their productivity will increase domestic firms’
participation in the export market
Description
Keywords
export spill-overs