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Outward foreign direct investment and product quality of domestic productions: An empirical investigation

    Yungho Weng Affiliation
    ; Chih-Hai Yang Affiliation
    ; Fang-Chiu Tu Affiliation

Abstract

While conceptual and theoretical studies have claimed that outward foreign direct investment (FDI) is an effective way to improve the quality of domestic production, there has been less systematic investigation into that claim. The statistical analysis of a survey of Taiwan's outward FDI activity shows that FDI had a positive effect on the quality of only 33.4% of investing firms. We further employ the microeconometric technique to analyze what kinds of globalization behaviors improve the quality of domestic firms’ products. The empirical results show that the strategy of expansionary FDI is more effective than defensive FDI at improving product quality because it allows domestic firms to learn advanced technologies from guest countries. Moreover, the reallocation of export between foreign affiliates and the parent company is an effective way for investing firms to focus on improving domestic product quality.


Santrauka


Remiantis koncepciniu ir teoriniu tyrimu rezultatais, ieinančios tiesiogines užsienio investicijos yra veiksmingas būdas vidaus produkcijos kokybei gerinti, tačiau tokiam teiginiui pagristi nebuvo atlikti sistemingi tyrimai. Taivanio ieinančiu tiesioginiu užsienio investiciju veiklos tyrimo statistines analizes duomenimis, tiesioginiu užsienio investiciju iš visu imones investiciju itaka kokybei sudaro tik 33,4 %. Toliau buvo taikoma mikroekonometrine metodika, siekiant ištirti, kokios rūšies globalizacijos elgsena pagerina vietines imoniu produkcijos kokybe. Empirinio tyrimo rezultatai parode, kad, gerinant produkcijos kokybe, pletros tiesiogines užsienio investicijos yra efektyvesnes nei apsaugines tiesiogines užsienio investicijos. Taip yra todel, kad jos leidžia šalies vidaus imonems sužinoti apie pažangias kitu šaliu technologijas. Be to, eksporto perskirstymas tarp užsienio filialu ir pagrindines imones yra veiksmingas būdas investuojančiai imonei daugiausia demesio skirti vidaus produkcijos kokybei.


First Published Online: 10 Feb 2011


Reikšminiai žodžiai: ieinančios tiesiogines užsienio investicijos, produkto kokybe, globalizacija, gamybos tinklas

Keyword : outward FDI, product quality, globalization activities, production network

How to Cite
Weng, Y., Yang, C.-H., & Tu, F.-C. (2010). Outward foreign direct investment and product quality of domestic productions: An empirical investigation. Journal of Business Economics and Management, 11(3), 396-414. https://doi.org/10.3846/jbem.2010.19
Published in Issue
Sep 30, 2010
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