Title: ANALYSIS OF THE EFFECT OF FOREIGN DIRECT INVESTMENT SPILLOVER ON THE LEVEL OF TECHNICAL EFFICIENCY OF INDUSTRY IN EAST JAVA
Author: AHMAD OKTABRI WIDYANANDA,
Universitas Airlangga
Item Type : Thesis (Thesis)
Abstract
Foreign Direct Investment (FDI) plays a crucial role in the development process, particularly in developing countries. The purpose of this study is to examine and analyze the influence of FDI spillover on the technical efficiency of large and medium-sized industries in East Java. This study uses a time-varying stochastic frontier approach for firm-level panel data in East Java. The results indicate that five factors influence the technical efficiency of large and medium-sized industries in East Java. The horizontal spillover and firm size variables positively influence the technical efficiency of the industry. The backward spillover, forward spillover, and market concentration variables negatively influence the technical efficiency. Meanwhile, the foreign share variable has no effect on the technical efficiency of the industry. In conclusion, it is necessary to build synergies and sustainable relationships between products produced by domestic and foreign companies. Therefore, the presence of foreign companies in East Java can positively impact the technical efficiency of the domestic industry, both upstream and downstream.
Keywords: Foreign Direct Investment Spillover, Technical Efficiency, East Java Industry