Trade regimes and spillover effects of FDI: Evidence from Uruguay

This paper examines differences in the character and impact of FDI entering Uruguay during import substitution, pursued until 1973, and the subsequent more outward-oriented trade regime. Regression analysis shows that the lab or productivity of local firms is positively related to the presence of old er import-substituting MNCs in their industry. The presence of foreign affi liates established after 1973 has no apparent impact on local productivity, but seems to raise the likelihood that local firms engage in exporting. Th is may be a sign of export spillovers, indicating that local firms may pick up some export-related skills from the operations of outward-oriented fore ign MNCs.