No abstract

JEL classification: D24 L8 L9 F21 F23 Keywords: Total factor productivity Service liberalization Foreign direct investment Chile Firm heterogeneityThis paper examines the impact of substantial foreign direct investment (FDI) inflows in producer service sectors on the total factor productivity (TFP) of Chilean manufacturing firms. Positive effects are obtained in firm fixed effects instrumental variables regressions and show that forward linkages from FDI in services explain 7% of the observed increase in Chile's manufacturing users' TFP. Our findings also suggest that service FDI fosters innovation activities in manufacturing. Moreover, we show that service FDI offers opportunities for laggard firms to catch up with industry leaders.

No abstract

Based on 50,013 firm observations covering 117 developing and emerging countries, this paper shows knowledge spillover effects from industries' use of the Internet boosted the average firm's productivity and innovation performance. We document that industries' "digitization" had heterogeneous impacts: results from quantile regressions indicate that the most productive firms benefited much more than others. Wider Internet adoption rates were also of larger benefit to singleplant establishments, non-exporters and firms in remote locations, particularly to the most productive among these firms. Overall, we document that the Internet can play an important role to support inclusive innovation, conditional on firms' "absorptive" capacities.

No abstract