Foreign direct investment and productivity spillovers: A quantile analysis

This paper estimates the within-plant and spillover productivity effects of foreigninvestment in Mexican manufacturing plants. It contributes to the existing literature by analyzing whether FDI of North American origin differs from FDI from the rest of the world. I also use quantile regression analysis to determine whether spillovers are equal for plants of different productivity levels. The results indicate positive and significant spillovers from the presence of foreign firms. However, these spillovers accrue only to plants at the upper end of the productivity distribution. Furthermore, North American based FDI appears to yield slightly larger spillovers relative to FDI from the rest of the world; however the difference is not statistically significant. A deeper look at this issue reveals that Canadian FDI yields large productivity spillovers relative to both US and rest of the world FDI. These differences are highly statistically significant.