Technology, Transfer and Spillovers: Does Local Participation With Multinationals Matter?

This paper examines the effects on technology transfer and spillovers deriving from ownership sharing of foreign multinational affiliates. More specifically, we try to answer two questions, using unpublished Indonesian micro data. First, do establishments with minority and majority ownership differ in terms of productivity levels? Second, does the degree of spillover differ with the degree of ownership in the Foreign Direct Investment (FDI)? Our results show that foreign establishments have comparable high levels of labour productivity and that domestic establishments benefit from spillovers. The degree of foreign ownership affects neither the level of labour productivity in foreign establishments, nor the degree of spillovers.