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This study aims to identify extensive and intensive margins in exports and imports and examine whether incoming foreign direct investments (FDI) benefit local firms in Indonesia through the export and import channels.

Using Heckman’s two-step selection model to consider the potential of bias of self-selection in export–import participation, this study uses the firm-level data from 2008 to 2015 collected from Statistik Industri and proximate both export and import spillovers.

The authors found that internal factors are critical for a firm to be an exporter, signaling self-selection in exports and imports. Spillover effects from FDI (spatial properties) support export but lower import propensity and intensity.

This study implies that improving human capital (absorptive capacity) is needed to accelerate export intensity and policies supporting FDI inflows in complementary sectors (noncompeting industries) can increase export propensity and intensity and reduce imports.

This study contributes to the literature in several ways. First, the proposed export spillovers model that accounts for impacts through a demonstration channel is applied to the import channel. Moreover, this study extends the model developed by Franco and Sasidharan (2010) and Yasin et al. (2022) by incorporating spatial spillover effects at the provincial level. Subsequently, the authors test whether a firm’s technological intensity determines export–import propensity and intensity. This can indicate whether specific sectors are more likely to participate in international activities based on their use of technology.

This study addresses the empirical results of the spillover effect with export as the primary economic activity that enhances local businesses' total factor productivity (TFP). A learning mechanism is expected to be generated and used as the basis for the policy implication.

This study adopted the Cobb–Douglas function and multiple estimation approaches, including the generalized method of moments, the Olley–Pakes and the Levinsohn–Petrin estimation techniques. The findings were estimated based on the panel data of a Vietnamese local businesses survey conducted by the General Statistics Office of Vietnam (GSO) from 2010 to 2019.

The results showed that the highest TFP belongs to the businesses in the Southeast region, the Mekong Delta region, the mining industry and the foreign-invested enterprises. The lowest impacted TFP are businesses in the Northwest region and agricultural, forestry and fishery sectors. In addition, the estimated results also show that the positive spillover effect on TFP is shown through forward and backward linkage. The negative spillover effect is expressed through the backward and horizontal channels.

This study offers original empirical evidence on the learning mechanisms via which exports contribute to productivity improvement in a developing Asian economy, so making a valuable contribution to the existing academic literature in this domain. The findings of this research make a valuable contribution to the advancement of understanding on the many ways via which spillover effects manifest such as horizontal, forward, backward and supplied-backward linkage.

The study's findings indicate that it is advisable for governments to give priority to the development and improvement of forward and supply chain linkages between exporters and local suppliers. This approach is recommended in order to optimize the advantages derived from export spillovers. At the organizational level, it is imperative for enterprises to strengthen their technological and managerial skills in order to efficiently incorporate knowledge spillovers that originate from overseas partners and trade counterparts.

This study sheds new evidence on the export spillover effect on productivity in emerging economies, with Vietnam as the case study. The paper contributes to the research's originality by adopting novel methodological aspects to estimate local businesses' impact on total factor productivity.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2023-0373

This paper analyzes the available literature on export spillovers from foreign direct investment (FDI) and their effects on domestic firms’ export activities. The purpose of this paper is to advance our knowledge of whether export spillovers from FDI exist, and if so if they differ according to the institutional context of the targeted markets (developed vs emerging markets).

Drawing from the pioneering work of Aitken et al. (1997), the authors develop a meta-analysis using a selection of 73 studies for the period 1997–2018, including a wide range of developed and emerging markets.

The meta-analysis confirms a high probability of finding positive effects when studying the different types of spillovers. The authors also show that the type of export spillover depends on the institutional context. Spillovers drive a complementary effect which generates more direct commercial links between domestic firms and foreign multinationals for advanced economies, whereas for emerging markets the nature of the spillover generates a competition/imitation effect that pressures domestic firms to be better inserted into foreign markets. In emerging markets, local governments play a fundamental role in accompanying the local industry, not only with investments in infrastructure and training of human capital but also in the configuration of an institutional environment that favors this type of indirect linkages. In developed countries, two business strategies are particularly important as catalytic axes of competitive upgrading at the international level: cooperation agreements between domestic and foreign firms and integration. These processes of concentration are necessary to compete globally, and therefore, governments should promote this type of strategies.

The study offers an original classification of the different types of spillovers based on the different channels through which MNE help local firms to improve their export performance and shows which specific spillover is associated with the different level of country development. These results have important implications in terms of theory development and managerial and policy implications.

This paper aims to examine spillover effects of heterogenous foreign direct investment (FDI) enterprises (domestic vs. export-oriented) through horizontal and vertical linkages and absorptive capacity effect on domestic firms' total factor productivity (TFP). It clarifies the spillover effect on domestic firms in accordance with industrial zones, business size, technology sector and geographical agglomeration, respectively.

The dataset used is based on Vietnamese manufacturing firms during 2011–2014, input–output (I–O) Table 2012. This paper is conducted in two steps: (1) TFP is estimated by using a semi-parametric approach developed by Levinsohn and Petrin (2003); (2) Regression with panel data for domestic firms, applying the fixed effect method.

In terms of domestic-oriented FDI (DFDI) enterprise group: TFP spillover through horizontal linkages is found negative for domestic firms but positive for those participating in export. Additionally, backward linkages have a negative impact on TFP for most domestic enterprises, except for those operating in the high-tech sector. In terms of export-oriented FDI (EFDI) enterprise group, horizontal linkages have a negative impact on domestic firms' TFP including domestic ones participating in export whereas backward linkage is an important channel with positive effects. Absorptive capacity enables firms to improve productivity through linkages with EFDI and DFDI enterprises. Exporters located in industrial zones or regions with numerous exporters can receive better impacts through backward linkages EFDI.

Comprehensively, this is the first paper to detect FDI heterogeneity in their behavior when entering a developing country like Vietnam. The added value in this study comes from the export ability of local firms which is in line with Melitz (2003) theory that they can excel in absorping the TFP spillover from competing with DFDI competitors or from supplying to EFDI enterprises. Moreover, the role of small and medium-sized enterprises (SMEs), low technology, high technology and learning by regions affecting the impact through both horizontal and vertical linkages are included for analysis.

The purpose of this paper is to develop a double mechanism model to separate two foreign direct investment (FDI) intra-industry spillovers mechanisms: spillovers by FDI intensity and by FDI efficiency. This paper seeks to illustrate the potential use of the double mechanism model rather than provide precise estimates of spillovers. The evidence on the links between technology and the nature, size and mechanisms of FDI spillovers effects in economically developing countries is mixed.

A model is developed and tested, in principle. Empirical testing was conducted in two steps. In the first step, the authors examined the effect of each influencing factor to FDI spillovers separately. To complete this step, the authors divided the whole sample industry into sub-groups and tested them with the double-mechanism using ordinary least squares regression. This study applies Chinese National Bureau of Statistics manufacturing industry level data, for the years 2000, 2001 and 2002, including the food industry, beverage industry, textile industry, textiles and garments, chemicals and chemical products industry, overall manufacturing equipment, special equipment, computer and other electronic equipment manufacturing industries.

The analysis suggests significant differences between types of spillovers: export orientation of domestic firms mainly influences FDI spillovers by intensity; the capability gap between local and foreign firms influences spillovers by efficiency; and the growth of local firms influences both types of spillovers. This paper develops existing models of FDI and suggests that disaggregating spillovers types may provide important theoretical and policy insights.

This study has found, first, that compared with the classic single mechanism model, the double mechanism model is more appropriate for testing FDI intra-industry spillovers, as it is able to separate spillovers by intensity and spillovers by efficiency, which are shown as two distinct mechanisms for FDI spillovers. This allows a deeper analysis into each mechanism and the identification of relevant influencing factors.

Although the theoretical arguments provide several channels through which innovation affects export, empirical validation of this relationship is scarce. Further, the impact of the diverse channels of domestic and foreign research and development (R&D) on export is assessed in isolation by previous studies. This paper empirically investigates the impact of technological innovation on export capacity and intensity of industrial enterprises in emerging countries by considering three channels of domestic innovation and foreign R&D spillovers, namely internal R&D, embodied knowledge and disembodied knowledge in a unified framework.

Data on China's industrial enterprises in the manufacturing sector are extracted from the China National Bureau of Statistics (NBSC), the Ministry of Science and Technology of China (MST) and the UN Comtrade database for the period from 1998 to 2020. The instrumental variables two-stage least squares (IV-2SLS) and three-stage least squares (IV-3SLS) methods are used to control for the possible endogeneity bias and the problem of cross-equation correlation between residuals.

The results show that internal R&D is a critical factor to enhance the export performance of enterprises in emerging countries, while the effect of embodied spillovers and public–private collaboration on export capacity and intensity of industrial enterprises is substantial. Further, disembodied knowledge that is acquired through licensing of technology from advanced countries does not directly contribute to the export performance of enterprises but requires a threshold level of internal R&D capability. This study’s results also report a greater effect of embodied knowledge spillovers on export capacity and export intensity than internal R&D in emerging countries. The results are consistent to changes in the sample period and the estimation methods. The findings of the paper suggest that developing countries can speed up the process of export upgrading by relying on both domestic and foreign R&D efforts.

The findings would help policymakers to keep in mind the relative importance of internal R&D and embodied and disembodied knowledge spillovers for export performance before formulating a catch-up strategy and the outcome would encourage them to consider prior related knowledge in terms of internal R&D capability while acquiring external technology.

This study fills the gap in the existing literature by providing empirical validation of the innovation–export interplay and simultaneously assessing the effect of three diverse channels of technological innovation on the export performance of industrial enterprises. This paper enunciates important policy lessons for emerging countries' smooth transition to a knowledge-based economy.

The purpose of this paper is to incorporate the spillover effects of trade on East Asian productivity, namely China, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore and Thailand.

This study attempts to fill in the gaps of previous studies by developing applications of extensive growth theory that shows the trade spillover effects on productivity growth of ASEAN 5 plus3. It further provides a meaningful statistical analysis in which, the first step of the estimation to get the coefficients of the explanatory variables that has been used by econometric approach. It can be restated here that in addition, a second step that plugs the parameters of the variables into the model in order to compute the contribution rates of productivity indicators including the calculation of the residual of the model (total factor productivity – TFP) and GDP contributions being used by growth accounting approach. The TFP is considered be trade spillover effects indicator that is showed the technology transfer to domestic firms and human capital skills upgrading.

The paper finds that there was a little contribution of exports and imports to TFP growth in these countries during all the periods of study. It confirms that high physical capital input growth resulted in high gross domestic product (GDP) contribution and low TFP contribution with insignificant technological progress experiences by most of these countries, with the exception of Japan and to some extent, South Korea.

In this respect, the trade spillover effects had transferred technology and developed human capital skills to a greater extent in the cases of Japan and Republic of Korea and their economies considered to be productivity driven economies.

There has been considerable debate about the impact that Foreign Direct Investment has upon home grown enterprise (Pathak et al., 2015). The purpose of this paper is to examine how foreign business ownership at the local level affects the decision of individual UK entrepreneurs to export their production.

The Global Entrepreneurship Monitor data and ONS foreign firm employment data are used within this study. In order to control for entrepreneurial and firm characteristics, a multivariate approach is adopted with logit, ordered logit and multinominal logit regressions utilised.

It is found that the influence of foreign firms, as captured by their share of local employment, has a negative influence on domestic entrepreneurs’ probability of exporting, but has no significant effect on the intensity of these export activities.

The results suggest that local economies may not only become highly reliant on foreign employers, but also on local demand for domestic production. This means actions might be required to reduce this over-reliance to ensure the development of resilient local economies.

Unlike many other studies the relationship between the SME exports and foreign influence is considered at a local level. With the current UK government seeking to increase UK firms’ exports substantially, understanding this relationship is of key importance to policy makers.

The present study seeks to assess whether the firm's location and agglomeration economies affect the firm's export propensity.

This work is based on a sample of 20,234 Portuguese manufacturing small and medium enterprises (SMEs) and resort to the estimation of a probit model.

Empirical results show that the location and agglomeration economies have an important role in determining the firm's export propensity. In particular, the study concludes that SMEs located in coastal areas or close to the border are more likely to export. Furthermore, the study also concludes that specialization economies are an important driver of small and medium-sized firms' export propensity while export spillovers are particularly relevant for micro firms. However, urbanization, measured through firms density in NUTS3 region, negatively affects firms' export propensity, which may be due to high congestion costs in the regions with a high firms density.

This study focus on the determinants of the decision to export or the export propensity, particularly the external factors such as the firm's location and agglomeration economies. This is a relatively neglected topic in the literature that has focused on the determinants of export intensity.

The purpose of this paper is to study the spillover effects of foreign direct investment (FDI) on skilled–unskilled wage inequality in the Indian manufacturing industries.

The authors show theoretically with a model of spillover that if foreign firms (receiving FDI) have a negative spillover effect on domestic firms (not receiving FDI), then the level of capital and skilled workers in the domestic firms falls down. Consequently, the authors conduct an empirical analysis by using system GMM estimation technique on the firm-level data of the Indian organised manufacturing sector.

The authors show that wage inequality worsens when there is negative spillover effects like competition spillover or skill spillover effect of FDI in India.

To the best of the authors’ knowledge, this is the first attempt to measure the various spillover effects of FDI on the wage inequality in the Indian manufacturing industries by using firm-level data.