Foreign Direct Investment can have positive effects on host countries by generating spillovers to domestic firms and contributing to increases in their productivity. These productivity spillovers 1 can take place within an industry (intra industry spillovers) and across industries (inter-industry spillovers) as in the case of technology or knowledge transfer to domestic suppliers (backward productivity spillovers) or customers (forward productivity spillovers). Using unpub lished economic census data from Mexico’s manufacturing sector this study differs from others by comparing inter industry productivity spillovers from Japanese and US FDI. Results show that Japanese FDI increases the productivity of upstream sectors; however these gains seem to be shared only among foreign suppliers, while US FDI does not seem to generate backward productivity spillovers. Results show no presence of forward productivity spillovers.
KeywordsForeign Direct InvestmentProductivity SpilloversBackward LinkagesForward LinkagesMexican Manufacturing Sector
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