The Effects of Joining Multinational Supply Chains: New Evidence from Firm-to-Firm Linkages

Abstract

This is a PEDL Research Paper which emanates from a PEDL funded project. Any views expressed here are those of the author(s) and not those of the programme nor of the affiliated organiiations. Although research disseminated by PEDL may include views on policy, the programme itself takes no institutional policy positions.

Global value chains and technology transfer: new evidence from developing countries

“…29 This analysis hints at the presence of transfers of foreign technologies along international supply chains to developing and emerging economies. The result is consistent with firm-level studies finding that GVC participation fosters knowledge transfers and productivity improvements in firms in developing countries (Atkin et al 2017;Del Prete et al 2017;Benkovskis et al 2020;Alfaro-Urena et al 2019).…”

“…In these cases, productivity improvement would be the factor driving the acquisition of foreign-licensed technology rather than the opposite, as this paper argues. However, a recent study by Alfaro-Urena et al (2019) finds, for firms in Costa Rica, no evidence of selection in supplying to multinational enterprises, strengthening the validity of my identification strategy. 32 These results are presented in Table 13 in the "Appendix".…”

“…Newman et al (2015) show that multinational enterprises transfer their technology and methods to their operations in destination markets through supply chain activities. Alfaro-Urena et al (2019) find that firms in Costa Rica experienced strong and persistent improvements in performance after starting to supply multinationals. My paper complements this literature, suggesting that through foreign licensing multinational enterprises might transfer international technology to their suppliers located in developing countries.…”

“…participating in GVCs. Benkovskis et al (2020) and Alfaro-Urena et al (2019) document the presence of strong and persistent productivity gains after firms join an international supply chain. My results are also in line with Del Prete et al 2017, establishing a causal link between GVC participation and firm-level productivity for a sample of North African manufacturing firms.…”

International Joint Ventures and Internal Technology Transfer vs. External Technology Spillovers: Evidence from China

“…Alfaro-Urena, Manelici, and Vasquez (2019) have recently employed actual firm-to-firm data instead of inputoutput tables to model firm linkages; they find even stronger evidence for important vertical linkages. Earlier work in this dimension isJavorcik and Spatareanu (2009) who employ information on whether local firms sell to a foreign multinational for a sample of Czech firms.…”