Productivity, economic growth, and foreign direct investment in the services sector: an econometric analysis

Abstract

Foreign Direct Investments (FDI's) have become important for countries of emerging economies, since they promote their economic development through the transfer of new technologies and the generation of jobs and the improvement of the productivity of domestic firms through spillover effects. Moreover, part of the FDI oriented to the manufacturing sector has been directed to the services sector, in which it has similar benefits to the manufacturing FDI. It is worth mentioning that a portion of the services sector known as Knowledge Intensive Business Services (KIBS), has stood out in the current scenario due to its capacity for innovation in a knowledge-based economy. Finally, this study aims to develop a pioneering study in Brazil whose objective is to analyze the regional effects of the FDI of services for the productivity and economic growth of the receiving municipalities. Therefore, the study will be conducted in the municipalities of the State of São Paulo using data obtained from the Regular Research Grant (APR) FAPESP 2019/19905. We hope that the results of this research will serve as an aid in the formulation of local policies related to Foreign Investments, and contribute to the literature that analyzes FDI aimed at the service sector in emerging countries.