| This dissertation consists of two main essays: the first essay analyzes the impact of foreign direct investment on local firms' productivity; the second essay estimates the user cost elasticity of investment in the context of high-tech firms.;Foreign direct investment is expected to bring knowledge externalities to domestic firms in host countries. This study uses firm-level data from Romania to investigate whether domestic firms benefit from spillovers from foreign direct investment through intra-industry as well as inter-industry channels. The results indicate that domestic firms benefit from the presence of foreign affiliates in the same industry. It also finds that while overall there are negative spillovers taking place through contacts between foreign firms and their local suppliers in upstream sectors, this is not necessarily always the case. Namely, backward linkages with partially-owned foreign companies result in positive and significant spillovers, but the opposite is true for linkages with wholly-owned foreign enterprises. Further, the data show that FDI projects undertaken by investors from outside Europe, unlike those by European companies, result in positive productivity spillovers through backward linkages.;Investment is the most volatile component of aggregate demand and it is often considered central to business cycles fluctuations. This paper investigates the investment user cost elasticity by focusing on a special class of firms---the high-tech firms. To provide a benchmark for the results, the user cost estimates for the high-tech sector are compared with those for the rest of the manufacturing sector. The results suggest that there is not much, if any, response of investment to variations in its user cost, even when an original disaggregated, industry-specific micro user cost variable and appropriate econometric techniques are used. The findings also suggest that high-tech firms' investment behavior is not, after all, that different from the rest of the manufacturing sector. Investment of both types of firms seems to be quite unresponsive to changes in the micro user cost. |
