The impact of Foreign Direct Investment on innovationevidence from municipality data in Brazil

Resumo

Current studies about the impact of foreign direct investment (FDI) on innovation in Brazil neglect the city as a unit of analysis, even though the city is the first geographical instance affected by it. I argue that FDI generates innovation for receiving municipalities because innovation is a positive spillover for the city, constituted by the transfusion of capital between a multinational firm and a local firm. To empirically evaluate the hypothesis that FDI increases innovation in the cities, I employ a twofold methodology: I run a fixed effects model as a benchmark and then a multilevel negative binomial model, both using patent data as a proxy for innovation and the count of transactions registered by the Central Bank to measure FDI. The results consistently demonstrate that FDI has a positive association with innovation at the city level. Other local determinants demonstrate that innovation has a positive correlation with greater absorptive capacity, and more agglomerated and economically diversified cities, but a negative association with the share of manufacturing workers. In this sense, this work demonstrates that on average Brazilian cities benefit from the presence of inflows of internationally-owned enterprises.

Ficha do documento

Tipo

Outro

Ano

2023

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso aberto

Identificador

oai:repositorio.fgv.br:10438/39143

Temas

EconomiaDesenvolvimento Econômico

Palavras-chave

Foreign Direct InvestmentInnovationSpillover effectKnowledge production functionProductivityCiência políticaInvestimentos estrangeirosInovações tecnológicas - BrasilIndústrias - LocalizaçãoProdutividade