Foreign Direct Investment Spillovers and the Absorptive Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992-2001)

Argentina received significant amounts of foreign direct investment inflows during the 1990s. This paper analyses whether positive (or negative) productivity spillovers arose from the increasing presence of transnational corporations (TNCs) affiliates in Argentina. We found that TNCs affiliates had higher productivity levels than domestic firms and that the latter, on average, received neither positive nor negative horizontal spillovers from the growing presence of foreign firms in the local economy. However, evidence of positive spillovers from TNC presence on domestic firms was found for those firms with high absorptive capabilities.