UC Irvine

The three chapters in this dissertation use firm-level data from Vietnam, Chile, and a set of Eastern-European countries to understand the importance of foreign direct investment in technology diffusion and subsequent environmental implications of changes in the production process. Chapter 1 investigates whether increased within-firm or within-industry foreign exposure, or foreign exposure from domestic downstream industry increases technology adoption. Chapters 2 and 3 look beyond technology spillovers of foreign investment, considering whether increased foreign investment affects domestic firm energy intensities. Chapter 2 studies whether domestic Vietnamese firms that become suppliers of domestic foreign-owned firms experience differential technology adoption and changes in energy intensity. Chapter 3 studies whether increased within-firm or within-industry foreign exposure, or foreign exposure from domestic downstream industry in Chile affects firm-level energy intensities.

Studying manufacturing and service firms in Eastern-European countries, Chapter 1 finds that technology gains from domestic foreign exposure differ between lower-income and higher-income countries. In higher-income countries, increased within-industry foreign exposure and increased foreign exposure from downstream industries on average increases technology adoption.

Studying Vietnamese manufacturing firms, Chapter 2 finds that firms that become suppliers of domestic foreign firms are on average more likely to have innovated than their non-supplier peers. These technology gains are found not to translate into short-run changes in energy intensity.

Studying Chilean manufacturing firms, Chapter 3 finds as firms experience increased within-firm foreign investment, they on average increase their electricity intensity. Moreover, increased within-industry foreign exposure on average increases electricity intensity for all firms, and fuel intensity for firms in ``dirty'' industries.