Assessing the Impact of Foreign Direct Investment on Domestic Manufacturing Firms’ Productivity: A Database for Portugal

The lack of a database that integrates a significant number of the variables necessary to empirically investigate the existence of externalities from FDI in Portugal represents an important limitation in this area. This paper presents a new balanced panel dataset with a total of 5,045 manufacturing firms (domestic and foreign) for the period 1995-2007. We use multiple imputation in Stata 13.0 to construct a large dataset containing several indicators taken from AMADEUS, Quadros do Pessoal, EU Klems and OCDE databases, that allow us to congregate variables that measure three dimensions: total factor productivity; foreign presence and factors that may influence the productivity of domestic firms, such as indicators of firm efficiency and R&D activities. Our panel dataset provides a set of useful 15 indicators for the analysis of externalities from FDI in 4,685 domestic manufacturing firms. We perform correlation analysis by technological groups based on Pavitt’s Taxonomy. Results indicate that the foreign presence is positively and significantly correlated with the TFP growth. Moreover, the sign and magnitude of the coefficients for the control variables indicate that concentration, the stock of foreign knowledge and the technological gap potentially assist the TFP growth of domestic firms, but only in some technological groups