Distance, time since foreign entry, and productivity spillovers from foreign direct investment

This paper investigates the effect of foreign direct investment on the productivity of local manufacturing firms in Romania. We decompose traditional country-wide spillover measures in different components according to both proximity between foreign and domestic firms and time-since-foreign-entry. We find larger and faster spillover effects for local suppliers of foreign firms at shorter distance, driven mainly by recent foreign entrants. Irrespective of distance, foreign firms of medium maturity generate backward spillover effects that fade away with longer presence. A positive effect on local competitors is not significantly affected by distance, but requires the presence of mature foreign firms