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Foreign Direct Investment, Information Spillover, and Export Decision: Evidence from Hungarian Firm-Level Data

Foreign Direct Investment, Information Spillover, and Export... and 1. INTRODUCTION Export promotion for domestic firms enriches the nation's foreign reserves. It also contributes to stability in the management and employment of these firms by obtaining a broad and diversified product market (Bernard and Jensen, 1999; Das et al., 2007). This is an important policy effect, especially for developing and post-communist transition economies that suffer from a great shortage of capital and the vulnerability of domestic economies. It is, therefore, natural for these countries to intently seek the benefits of export promotion. In the context of linkages with the global market, another economic policy intensely promoted by the governments of developing and transitional countries is the attraction of foreign direct investment (FDI). Multinational enterprises (MNES) from developed economies not only contribute to the creation of new markets and jobs in the host counties but also have great potential to vitalize the domestic economies through the cross border transfer of advanced technology and knowledge. A number of recent studies have revealed that these two policy measures for deepening integration with the world economy are closely connected to each other in the sense that the attraction of FDI stimulates the export activity of local firms. It is argued http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of World Investment and Trade Brill

Foreign Direct Investment, Information Spillover, and Export Decision: Evidence from Hungarian Firm-Level Data

Journal of World Investment and Trade , Volume 12 (4): 30 – Jan 1, 2011

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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1660-7112
eISSN
2211-9000
DOI
10.1163/221190011X00256
Publisher site
See Article on Publisher Site

Abstract

and 1. INTRODUCTION Export promotion for domestic firms enriches the nation's foreign reserves. It also contributes to stability in the management and employment of these firms by obtaining a broad and diversified product market (Bernard and Jensen, 1999; Das et al., 2007). This is an important policy effect, especially for developing and post-communist transition economies that suffer from a great shortage of capital and the vulnerability of domestic economies. It is, therefore, natural for these countries to intently seek the benefits of export promotion. In the context of linkages with the global market, another economic policy intensely promoted by the governments of developing and transitional countries is the attraction of foreign direct investment (FDI). Multinational enterprises (MNES) from developed economies not only contribute to the creation of new markets and jobs in the host counties but also have great potential to vitalize the domestic economies through the cross border transfer of advanced technology and knowledge. A number of recent studies have revealed that these two policy measures for deepening integration with the world economy are closely connected to each other in the sense that the attraction of FDI stimulates the export activity of local firms. It is argued

Journal

Journal of World Investment and TradeBrill

Published: Jan 1, 2011

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