I examine whether foreign direct investment increases the productivity of manufacturing firms. I test the proposition … from multinationals (spillovers through forward linkages). The existing literature on productivity spillovers has relied on … forward linkages. My results provide strong support for the existence of productivity spillovers through backward linkages …

foreign firms, the impact of spillover effect of inward FDI is contingent upon the productivity gap between the domestic firms … productivity gap between domestic low-productivity firms and foreign firms and works conversely for high-productivity firms. This … result suggests that once the productivity gap widens, the entry of foreign firms will increase the efficiency of high-productivity …