No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Does FDI Work as a Channel for R&D Spillovers? Evidence Based on Swedish Data
Abstract
Multinational enterprises (MNEs) are important in transmitting technology across national borders. Not only do they allow for transfer of technology within the firm, but it is also believed that they are important channels for international R&D spillovers as well. This paper analyzes empirically whether inward and outward foreign direct investment (FDI) work as channels for international R&D spillovers. We utilize firm-level as well as industry-level data for Swedish manufacturing in the analysis. We find no evidence of FDI-related R&D spillovers - neither at the firm-level nor at the industry-level in Swedish manufacturing. The only variable that consistently affects total factor productivity is own investment in R&D.
... Halpern and K˝ orösi [32], Angelucci et al. [2], Dimelis and Louri [14], Djankov and Hoekman [15], Girma and Wakelin [29], Braconier et al. [7], Kinoshita [40], and Konings [41]. productivity gap of a firm to the industry frontier and investigates the absorptive capacity of an indigenous firm to benefit from spillovers of the industry frontier firm by applying threshold regression techniques. ...
... The database 9 See analogue arguments in Aitken and Harrison (1999) and Barry et al. (2001). 10 This idea has been formalized in Keller [37] and Glass and Saggi [21] and tested in several recent papers such as Braconier et al. [7], Konnings [41], Kinoshita [40], and Girma [27] using traditional measures of foreign presence in an industry. of Centro Studi Luca d'Agliano is a merger of the AIDA database of Bureau van Dijk with balance sheet and profit and loss account information and the MNE database of Politecnico Milano, which contains ownership information. ...
... Finally, we investigate the so called " absorptive capacity " hypothesis. 35 In investigating this question we follow Braconier et al. [7], Konings [41], Kinoshita [40], and Girma [27]. We adopt the estimation technique of Girma [27] using threshold regressions (Hansen [33]). ...
The presence of foreign multinational enterprises (MNEs) can benefit local economies. In particular, if MNEs are very productive compared to domestic firms, they may promote learning and catch-up of local firms. Such a channel of spillovers fromMNEs to local firms is known as the Veblen-Geschenkron effect. Rather than the overall density of MNEs in a region or sector, it is their initial productivity advantage on the local firm to determine the positive effect on domestic productivity growth. We test this hypothesis using firm level data for German and Italian companies during the 90ies and we find evidence of a significant and robust Veblen-Gerschenkron effect.
... Coe and Helpman, 1995;Lichtenberg and Van Pottelsberghe de la Potterie, 1996;, sectoral (e.g. Braconier et al. 2001;Sjöholm, 1997;Barrell and Pain, 1999;Verspagen, 1997), firm (e.g. Aitken and Harrison, 1999;Keller and Yeaple, 2003;Branstetter, 2000) and regional (e.g. ...
... Keller and Yeaple, 2003;Kinoshita, 2000;Barba Navaretti and Castellani, 2003), to no spillovers (e.g. Braconier et al., 2001;Veugelers and Cassiman, 2004;Cornish, 1997) to even negative spillovers (Aitken and Harrison, 1999). According to Görg and Strobl (2001), this large variety in results has three main causes: (1) different levels of analysis, (2) through specific spillover transfer channels. ...
... As seen that, although different sample countries and years have used in different analyses, the results are mainly similar. According to these studies, R&D activities and FDI are closely related, except the study of Braconier et al. (2001). This paper focuses on this relationship for the EU-15 countries and Turkey in the light of this wide empirical literature. ...
... RD it = ß 1 FDI it + ß 2 IMP it + ß 3 RD(-1) it + ß 4 FDI(-1) it + ß 5 IMP(-1) it + u it significant effect on current R&D intensity for the significance levels of %5 and %10. Although this result is contradicting with Braconier et al. (2001), it is agree with the results of Bitzer and Kerekes (2008), Zhu and Jeon (2007), Kök andŞimşek (2006), Jaumotte andPain (2005), Yeh (2005), Li andHu (2004), Damijan et al. (2003), Potterie and Lichtenberg (2001), Kinoshita (2000), Hejazi and Saferian (1999) and Bertschek (1995). ...
The main purpose of this paper is to test the impacts of foreign direct investments and imports on research and development intensities of European Countries and Turkey. A panel data analysis has been applied to test the relationship between foreign direct investments, imports and research and development intensity for the time period of 1995 – 2007. Following the literature, we assumed that foreign direct investments have positive and import has negative impacts on research and development intensity. Moreover as a result of econometric estimation, we explored that net foreign direct investments inflows, one-year lagged value of net foreign direct investments inflows and one-year lagged value of research and development intensity have positive impacts on the current research and development intensity. On the other hand, current value of imports and its one-year lagged value have statistically no significant effect on the dependent variable.
... Konings and Murphy, 2006), there has been little academic work on the link between a country's outward investment and productivity. Exceptions are papers by van Pottelsberghe and Lichtenberg (2001) and Braconier et al. (2001) who investigate specifically whether outward FDI benefits the domestic economy through R&D spillovers – i.e. whether, by investing abroad, firms are able to access the foreign technology stock and transfer the knowledge back to the domestic economy. Van Pottelsberghe and Lichtenberg (2001) use aggregate country-level data and find that outward FDI into R&D-intensive countries is a significant channel for knowledge spillovers and that countries' productivity is thus positively influenced through technology sourcing. ...
... Van Pottelsberghe and Lichtenberg (2001) use aggregate country-level data and find that outward FDI into R&D-intensive countries is a significant channel for knowledge spillovers and that countries' productivity is thus positively influenced through technology sourcing. However, Braconier et al. (2001) do not find such evidence in Swedish industry-and firm-level data. 2 Both studies investigate only the effects of FDI as a channel for knowledge spillovers through R&D and neglect other potential effects – most importantly the competition effects as highlighted in some of the studies on inward FDI. Given this somewhat unsatisfactory state of the literature, this paper provides new evidence on the link between productivity and FDI. ...
This paper investigates the productivity effects of inward and outward foreign direct investment using industry- and country-level data for 17 OECD countries over the period 1973 to 2001. Controlling for national and international knowledge spillovers we argue that the effects of FDI work through direct compositional effects as well as changing competition in the host country. Our results show that there are, on average, productivity benefits from inward FDI, although we can identify a number of countries which, on aggregate, do not appear to benefit in terms of productivity. On the other hand, a country's stock of outward FDI is, on average, negatively related to productivity. However, again there is substantial heterogeneity in the effect across OECD countries. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.
... If there are small spillover e¤ects in Sweden, it is natural to think that e¤ects may accrue abroad to a large extent. However, the result by Braconier et al. (2001), already reported on, does not give support to this hypothesis. No international spillovers were found, even though only intraindustry spillovers were estimated. ...
... No international spillovers were found, even though only intraindustry spillovers were estimated. Therefore, only if either international spillovers occur across industries, or spillovers are not correctly captured via FDI channels (as used in Braconier et al., 2001), it seems as if international spillovers can be the explanation for the …nding of small R&Dspillovers . Other seemingly plausible explanations are that either larger …rms are better at protecting their knowledge, or that they are worse at appropriating other …rms'R&D-knowledge, reducing the amount of spillovers in either case. ...
Exxon Mobil and ConocoPhillips stock price has been predicted using the difference between core and headline CPI in the United States. Linear trends in the CPI difference allow accurate prediction of the prices at a five to ten-year horizon.
... Unexpectedly, the literature concerning the possible macro-economic influences of foreign investment on the domestic economies is scarce, as the current studies focused first and foremost on the examination using micro-level data at the industry and firm levels (Braconier et al. 2001;Kamal et al. 2022). On the other hand, the study on the association between economic growth and FDI, particularly at the macro level, is very scarce. ...
The Mexico, Indonesia, Nigeria, and Turkey (MINT) economies are recognized to be bedeviled with many confronts hampering the economic expansion. In the meantime, many of these problems have not been comprehensively scrutinized in the context of the countries. In recent years, natural resources and tourism development have significantly increased in MINT economies. This study scrutinizes the relationship between natural resource rent, mobile use, foreign direct investment, international tourism, and economic growth in a balanced panel data of four MINT nations from 1971 to 2019. The key finding of this study shows that there is a positive and significant impact of foreign direct investment, natural resource rent, mobile use, 2 and international tourism on MINT's economic growth. Furthermore, the tourism-led growth hypothesis is supported empirically in the case of MINT nations. Further, the Granger causality analysis demonstrates that unidirectional causality is discovered from economic growth to tourism. The study recommends that MINT nations implement some useful tourism strategies to push up economic development, and in turn, economic growth will positively contribute to the tourism sector.
... The picture becomes more complex when attempting to identify the economy-wide effects of these firm-level processes. The existing literature does not generate clear predictions on the impacts of outward FDI on the home country in terms of output (e.g., Blonigen, 2001;Head and Ries, 2001;Desai et al., 2005), productivity (e.g., Braconier et al., 2001;van Pottelsberghe de la Potterie and Lichtenberg, 2001), and employment (e.g., Brainard and Riker, 2001;Konings and Murphy, 2006;Castellani et al., 2008). Depending on the nature of the investment and its motive, there can be some combination of labor substitution and complementarity in shaping home-economy employment impacts. ...
Rising political skepticism on the benefits of global economic integration has increased public scrutiny of the foreign activities of domestic firms in virtually all advanced economies. Decisions to invest in new activities abroad are seen by some commentators as potentially detrimental to domestic employment. We contribute to this debate by scrutinizing the relationship between outward ‘greenfield’ Foreign Direct Investments (FDI) and local employment levels. The analysis, at the scale of USA Economic Areas, finds a generally positive link between outward investment and local employment, but with an important range of differences across regions and sectors. Less developed regions benefit the most from the positive returns of outward FDI, and, particularly, from outward FDI if it is undertaken by firms in high-tech manufacturing and services industries. But there is a downside, in the form of increasing intra-regional inequalities between high-skilled and low-skilled workers in these areas.
... Based on the aforementioned factors, it is suggested that OFDI has a strong association with economic growth of the home country. Surprisingly, the studies regarding the potential macroeconomic effects of OFDI on the home countries are scarce, as existing literature focused primarily on the analysis using microeconomic data at the firm-and industry-levels (Braconier, Ekholm, & Knarvik, 2001;Desai et al., 2005;Navaratti & Castellani, 2002). However, the research on the relationship between OFDI and economic growth, especially at the macroeconomic level, is limited. 1 Our research adds to the existing literature by utilizing aggregate level data of OFDI and economic growth by providing essential policy implications at the macroeconomic level. ...
Globally, the outward foreign direct investment (OFDI) has significantly increased during recent years. In the light of OFDI's role in determining the GDP growth rate, it is necessary to assess how economic growth rate responds to such outflows. Based on the non‐linear autoregressive distributive lag (NARDL) model, the present study investigates the long‐run and short‐run asymmetric impacts of OFDI on the economic growth in Romania covering the period 1990–2019. The results indicate that both an increase and a decrease in OFDI have a positive and significant impact on Romania's economic growth, with a greater effect arising from the increase in OFDI. Our research adds to the preceding literature by providing new insights into the OFDI‐led growth hypothesis. The results of the present study portray the growth‐enhancing effects of OFDI, which are consistent with the notion that firms conduct OFDI in order to combine domestic output with overseas output to decrease expenditures and to enhance their competitiveness both at global and domestic levels. Thus, an increase in OFDI is both a cause and a consequence of the home country's economic growth.
... One possible explanation might be that regional innovation networks play an important role that have to be given up when relocating to foreign countries. Another explanation for differences in the offshoring effect with respect to innovation outcomes is given by Braconier et al. (2001). The authors found for an unbalanced panel of 87 Swedish multinational firms observed between 1978 and 1994 that innovation gains are particularly expected to be present for the relocation of business activities to knowledgeintensive countries, thus hinting at the role played by technological and knowledge capabilities in the destination location of outsourcing activities. ...
We analyse the empirical link between offshoring activities and different dimensions of innovation performance at the firm-level. In order to identify causal effects running from offshoring to innovation, we use a quasi-experimental comparison group approach by means of (conditional) difference-in-difference estimations applied to German establishment-level data for firms that conducted offshoring activities in the period 2007-13. We find that the international relocation of business functions has a negative impact on the firms' propensity to be innovative in terms of product and process innovations as well as product improvements. While for larger firms the reduction in process innovations is most striking, potentially due to a lack of resources, stagnation in expertise and a reduction in intra-organizational learning-by-doing associated with the relocation of some business activities, for small and medium-sized enterprises we particularly observe a reduction in product innovations after the offshoring activity has taken place. When interpreting this 'pessimistic' picture on the link between offshoring and the innovation performance of firms, the reader should note that our findings for German establishments have to be assessed through the lens of a global economy in economic recession after 2008, which may have intensified the negative impact of offshoring on the firms' innovation performance. © 2015 Board of Trustees of the Bulletin of Economic Research and John Wiley & Sons Ltd.
... Marin (2004) finds that Eastern enlargement of the EU has resulted in small job losses as low-cost jobs in Eastern Europe do not compete with jobs in Germany and Austria. In addition to evidence on employment, Braconier et al (2001) find that outward FDI does not increase total factor productivity of Swedish firms (through technology transfer or R&D), whereas van Pottelsberghe de la Potterie and Lichtenberg (2001) find that outward FDI in R&D rich countries does have positive productivity effects at home. Studies by Head and Ries (2001) and Blonigen (2001) question whether outward FDI substitutes exports and find that exports and FDI are complements using manufacturing data on Japanese MNCs and that they can be both substitutes and complements using product-level Japanese data respectively. ...
The aim of this paper is to examine causal effects of outward foreign direct investment activities of
corporations that start expanding abroad on a large number of domestic performance indicators.
Our results indicate that there is no evidence in our data to show that FDI has statistically significant
impact on productivity, employment and output. The only statistically significant result indicates that
FDI causes positive growth in export intensity. On the other hand when we restrict our sample to
Belgian manufacturing firms only, we do find that switching to OFDI causes a positive growth in
TFP. This effect is coupled with an increase in wages and exports. On the other hand, we do not
find any statistically significant evidence that internationalization of Belgian firms causes loss of
employment for the unskilled worker as in other studies.
... Both studies investigate only whether outward FDI into major R&D-performing countries acts as a channel for R&D spillovers, thus neglecting all other potential productivity effects of outward FDI. Braconier et al. (2001), in contrast, investigate both the effect of the outward-FDI-weighted foreign R&D capital stock and the effect of "pure" outward FDI on domestic productivity. Using firm-and industry-level data for Sweden over the period 1978-1994, they find neither evidence of FDI-related R&D spillovers, nor any correlation between outward FDI per se and domestic productivity for Sweden. ...
Nutzungsbedingungen: Die ZBW räumt Ihnen als Nutzerin/Nutzer das unentgeltliche, räumlich unbeschränkte und zeitlich auf die Dauer des Schutzrechts beschränkte einfache Recht ein, das ausgewählte Werk im Rahmen der unter → http://www.econstor.eu/dspace/Nutzungsbedingungen nachzulesenden vollständigen Nutzungsbedingungen zu vervielfältigen, mit denen die Nutzerin/der Nutzer sich durch die erste Nutzung einverstanden erklärt. Terms of use: The ZBW grants you, the user, the non-exclusive right to use the selected work free of charge, territorially unrestricted and within the time limit of the term of the property rights according to the terms specified at → http://www.econstor.eu/dspace/Nutzungsbedingungen By the first use of the selected work the user agrees and declares to comply with these terms of use. Abstract This paper examines the long-run relationship between outward foreign direct investment (FDI) and total factor productivity for a sample of 33 developing countries over the period 1980-2005. Using panel cointegration techniques, we find that: (i) outward FDI has, on average, a positive long-run effect on total factor productivity in developing countries, (ii) increased factor productivity is both consequence and a cause of increased outward FDI, and (iii) there are large differences in the long-run effects of outward FDI on total factor productivity across countries. Cross-sectional regressions indicate that these cross-country differences in the productivity effects of outward FDI are significantly negatively related to cross-country differences in labor market regulation, whereas there is no statistically significant association between the productivity effects of outward FDI and the level of human capital, the level of financial development, or the degree of trade openness in the home country.
... There is considerable evidence to indicate that spillovers may not occur in as efficient a manner as the neo-classical economic theory might suggest. Indeed, much of the evidence on developing countries points to very limited indirect benefits from FDI. Non-significant or negative spillovers have been obtained previously also by Harrison (1991 and1993) for Morocco, Aitken and Harrison (1999) for Venezuela, Braconier et al, (2001) for Sweden, Chung (2001) for the United States, Konings, (1999) for Bulgaria and Romania, and Djankov and Hoekman (2000) for the Czech Republic. We examine below the evidence for Argentina. ...
... 3 Non-significant or negative spillovers. See evidence byHaddad & Harrison (1993) for evidence in Morocco;Aitken & Harrison (1999) in Venezuela;Braconier, Ekholm, & Knarvik (2001) for Sweden;Chung (2001) for the United States;Konings (2000) for Bulgaria and Romania; andDjankov & Hoekman (2000) in the Czech Republic. ...
... • Studies focusing on firm-level (or establishment-level) spillovers related to FDI and patents (Branstetter, 2006;Peri and Urban, 2006;Hu, 2004;Veugelers and Cassiman, 2004;Braconier, Ekholm and Midelfart Knarvik, 2001). ...
Openness has been shown to be an important driver of economic growth. Because of the broad character of the current globalisation process, openness has many dimensions: trade (in both goods and services), foreign direct investment (FDI), circulation of people (including the highly skilled), and internationalisation of R&D, technology and knowledge. Economies not only benefit from inward flows of goods, services, people, capital and knowledge, but also from outward flows of those factors of production. But economic openness does not necessarily yield automatic benefits, and governments may need to complement policies to open the economy with policies that help individuals and firms adjust to liberalisation and ensure that aggregate benefits for the domestic economy are optimised. This working paper aims to assess the openness of the Japanese economy and to show how policies promoting openness are conducive to long-term growth. First, the paper benchmarks Japan in terms of openness in an international perspective relative to other G20 countries. Second, it reviews the theoretical and empirical literature on the link between openness and economic growth. Third, it illustrates the role that governments can play in stimulating openness and growth by presenting several case studies of countries that have implemented specific policies to promote openness in particular domains.
... Several earlier empirical works have examined the effects of outward FDI on output (Head and Ries, 2001; Blonigen, 2001), home employment (Brainard and Riker, 1997a and 1997b; Braconier and Eckholm, 2002; Konigs and Murphy, 2006; Bruno and Falzoni, 2000; Blomström et al., 1997; Lipsey, 1999; Mariotti et al., 2003; Marin, 2004), productivity (Braconier et al., 2001; van Pottelsberghe de la Potterie and Lichtenberg, 2001). They generally find that the effect of FDI is positive or that short term costs get offset in the longer term. ...
Transferring low tech manufacturing jobs to cheap labour countries is often seen by part of the general public and policy
makers as a step into the de-industrialization of the European economies. However, recent contributions have shown that the
effects on home economies are rarely negative. Our paper contributes to this literature by examining how outward investments
to developing and less developed countries (LDCs) affect home activities of French and Italian firms that turn multinational
in the period analysed. The effects of these investments are also compared to the effects of investments to developed economies
(DCs). The analysis is carried out by using propensity score matching. We find no evidence of a negative effect of outward
investments to LDCs. In Italy they have a positive long term effect on value added and employment. For France we find a positive
effect on the size of domestic output and employment.
... Although to a large extent the core technology of the firm still builds upon research and technology developed at home, it has been shown that a process of globalisation of technology is taking place and MNEs are increasingly setting up global networks of affiliates which tap into different scientific and technological basis (Cantwell, 1995, Pearce, 1999). As far as firm's productivity is concerned Braconier et al. (2000) measured by the change in domestic capital, represents a technological externality to foreign firms production in the UK manufacturing industries. Results show that such externalities exists and are appropriated by foreign firms but only in R&D intensive sectors. ...
Multinational firms are traditionally considered as firms possessing some technological lead and which are exploiting this proprietary advantage in international markets, but a growing literature has been arguing that multinational firms set up foreign subsidiaries not only as a means to exploit their own technology but also to enrich it. This paper provides some empirical evidence for this. The aim of the paper is to assess the effects of the creation of foreign subsidiaries on firms' technological trajectories.The idea is that by setting up subsidiaries in foreign countries, multinational firms can achieve some form of reverse technology transfer that can be expected to affect their technological trajectories.The empirical investigation uses data from 1992 to 1996 for a sample of 2185 Italian manufacturing firms. Results support the view that the creation of manufacturing subsidiaries has a positive impact on firms' productivity trajectories and this positive impact is greater when subsidiaries are created in regions where knowledge spillovers are expected to be relatively higher, such as the US.
... TTs to the host-country through FDI (see, for instance Eaton and Kortum (1996); other authors find some evidence of a limited, though encouraging influence (Giroud 2000). Finally, other find no evidence at all of TT through FDI (Braconier et al. 2001; UN-ECE 2000; Veugelers and Cassiman 2004). The first study is especially useful since it considers as variables the affiliates' employment and expenditure on R&D, not just the presence of MNEs in the host-country. ...
Whereas foreign investment innovation (FII) has become increasingly common, after decades of debate it is still unclear whether
it is desirable for the home country or for the company’s host country. This paper reviews articles from three complementary
economic and business traditions which investigate this phenomenon and propose policies based on facts: the economics of technological
change tradition, the international business (IB) tradition, and the line of research on international technology transfers.
Articles in line with these strands of theory complement each other because they approach different aspects of complex events
while explaining FII and its effects on host and home countries. Host countries obtain maximum benefits from FII when affiliates
import foreign technology, purchase their inputs in the host country and enjoy product and technological autonomy vis-à-vis
the parent. Different types of MNEs, affiliates and foreign R&D units have different potentials for transferring technology
to host countries and provide different scope for policies. The authors recommend that governments encourage direct vertical
linkages between MNEs and domestic suppliers who could reap the benefits from foreign knowledge. However, some important success
factors remain exogenous to governments. As for indigenous MNEs, it is a matter of controversy whether governments should
always stimulate them to conduct research in foreign locations or, alternatively, incentive them to stay at home. The need
for additional evidence is still considerable in many respects.
... Such demand-following foreign expansion is also found in engineering, management consultancy, security, legal and tax consultancy. 34 Braconier et al. (2000) found no evidence-for Swedish manufacturing FDI-that this 'listening post' mechanism is really important for technology spillovers. However, as a way of gathering general market information and for being represented in relevant networks, local representations in some financial and business centres may be essential. ...
The report analyses the exposure of business services industry to foreign competition, either through trade or through foreign direct investment. Internationalisation of the Dutch business services industry is compared to the situation in the USA and a number of EU countries. The theoretic framework offers a micro-foundation for internationalisation decisions by individual firms, in particular the choice between exporting, licensing one's product to an independent foreign supplier, and setting up own production in a foreign subsidiary. The framework accounts allows for the importance of intangible assets in competition process, as is found in many knowledge-intensive branches of the business services (BS) industry. The presence of intangible assets strengthens the urgency of having a local presence in foreign markets. The theory predicts that the exposure of BS industry to foreign competition will increasingly get the form of direct investment instead of imports or licensing agreements. The theoretic framework stood up quite well against the empirical data in the BS industry. The growth of domestic BS markets correlates negatively with the import share in total supply and positively with the share of foreign subsidiaries in domestic supply. National regulations have a substantial impact on trade and direct investment patterns in the BS industry. Regulatory interventions either operate directly through laws or indirectly, by delegating the regulatory powers to national branch associations. This is particularly important for knowledge-intensive BS branches. Foreign BS suppliers often have to comply with several additional regulations that function as non-tariff barriers to national BS markets. Strong differences exist between countries as to the strictness of market regulations for BS industry. The Dutch and UK markets for business services are among the most liberalised ones. Large net welfare gains for national economies can be achieved by allowing more competition from foreign BS suppliers: technology and knowledge spillovers from abroad, better services quality, more competition in domestic BS markets, scale-related cost advantages, and cheaper intermediary BS inputs for client industries. Buyer protection for some knowledge-intensive professional business services can be shaped in a more non-discriminatory way than is the case now. On balance, removal of remaining barriers for imports of BS products and foreign subsidiaries is expected to have positive net welfare effects. Dutch BS firms are in a good position to benefit from future deregulation and liberalisation of BS industry in other OECD countries.
... More recently, empirical and theoretical models in International Trade have started to focus on the effects of MNEs on output growth (see a.o. Lichtenberg and van Pottelsberghe (1998), Barell & Pain (1999), Baldwin et al (1999), Braconier et al (1999). These empirical studies use FDI flows as weights when summing the stock of foreign R&D, based on the notion that FDI increases the proximity between sender and receiver of know-how and hence leads to higher spillovers. ...
The use of FDI as a channel of international spillovers is by now fairly established in the empirical literature on innovation and growth. It is often argued that subsidiaries of foreign MNEs are a mechanism through which technological know-how flows across borders. For foreign subsidiaries to be channels of international spillovers, these subsidiaries need to source know-how internationally and at the same time transfer their know-how to the local economy. Using direct firm level evidence from Belgian CIS-survey data on the occurrence of technology transfers, we find that foreign subsidiaries are indeed more likely to acquire technology internationally. But once controlled for the superior access to the international technology market that foreign subsidiaries enjoy, we find that these firms are not more likely to transfer technology to the local economy. This suggests that foreign subsidiaries are not necessarily interesting sources for local transfers. What seems to be important for local technology transfers is having an international network that provides access to international technology
... The generally positive results in the earlier generation of studies have largely disappeared, both for advanced industrial economies -e.g. Sweden (Braconier et al., 2001) or the USA (Chung, 2001), and also when they are transition or industrialising economies -see for example Harrison, (1991 and1993) on Morocco, Djankov and Hoekman (2000) on Czech Republic, Aitken and Harrison (1999) on Venezuela, and Konings, (1999) on Poland, Bulgaria and Romania. ...
This paper seeks to examine the paradox that despite the growing role of FDI in most economies and growth in their share of employment, exports and innovation (‘direct spillovers’), evidence of technological spillovers to domestic firms in the host economy (‘indirect spillovers’) is sparse. Given the explicit dependence of the development strategies of developing countries on FDI after liberalization, it is important for us to ask: Why are these indirect spillovers not occurring? The evidence examined here shows that for the case of Argentina, there are direct spillovers in the form of human capital development and employment. However, there is no evidence of significant positive indirect spillovers to non-affiliated firms in Argentina. Part of this paradox may be explained by the fact that MNEs have acquired the most technologically competitive of their domestic rivals, and crowded out others. However, we postulate that there are a variety of other economic reasons why FDI may prove to be less useful as a driver of industrial development than has previously been argued. The extent to which direct spillovers result in indirect spillovers is intermediated by a number of factors, associated with the MNE and the nature of its assets and the organization of its global operations; the influence of increased cross-border competition on the distribution, concentration and competence level of affiliates and domestic firms, and the nature and extent of the absorptive capacity of the domestic sector.
... Several earlier empirical works have examined the effects of outward FDI on output (Head and Ries, 2001; Blonigen, 2001), home employment (Brainard and Riker, 1997a and 1997b; Braconier and Eckholm, 2002; Konigs and Murphy, 2006; Bruno and Falzoni, 2000; Blomström et al., 1997; Lipsey, 1999; Mariotti et al., 2003; Marin, 2004), productivity (Braconier et al., 2001; van Pottelsberghe de la Potterie and Lichtenberg, 2001). They generally find that the effect of FDI is positive or that short term costs get offset in the longer term. ...
This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indices for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political autonomy of the central banks in emerging market and developing countries. Our analysis confirms that greater CBA has on average helped to maintain low inflation levels. The paper identifies four broad principles of CBA that have been shared by the majority of countries. Significant differences exist in the area of banking supervision where many central banks have retained a key role. Finally, we discuss the sequencing of reforms to separate the conduct of monetary and fiscal policies. IMF Staff Papers (2009) 56, 263–296. doi:10.1057/imfsp.2008.25; published online 23 September 2008
Purpose-The purpose of this paper is to examine the impact of outward foreign direct investment (FDI) on Vietnam's economic growth.
Design/methodology/approach-The GDP regression method according to OFDI, which takes into account the effect of exports, with continuous secondary data from 1998-2019. Findings-The results indicate that outward FDI from Vietnam had a positive impact on the it's GDP growth. Specifically, if OFDI capital increases by 1 unit, Vietnam's real GDP will increase by 9.38 units. Therefore, it is recommended that Vietnamese policymakers should have a more positive awareness of OFDI, as well as have active supportive policies for Vietnam's OFDI to bring about national benefits. Keywords: Outward FDI, OFDI, FDI, Foreign direct investment
Starting with the first observation that the African continent has been and still is, one whose inhabitants are the poorest in the world, we have assigned a target to try to identify the ins and outs. In light of advances in growth theory, we have listed the two main mechanisms conveyors of economic growth, namely the accumulation of factors of production and technical progress. As second observation, we noticed that both the investment rate and the level of technical progress was lower on the African continent than elsewhere. Also aware of this situation, the governments of these countries have begun to attract more foreign investment as possible, on the one hand considered as a way to circumvent the lack of productive investment and secondly as a mode of adoption of new technologies. Therefore, the impact of FDI on economic growth in developing countries and in Africa in particular, has been the object of our study. We found in our study, as in the literature on the subject, that the impact of FDI on domestic investment in Africa is neutral, supporting the assumption that these investments increase at least the stock of physical capital per head of our African sample. In doing so, the FDI will affect the per capita income of countries in our sample, in different proportions but according to the same principle as the national investments. We found that foreign direct investment, had an average positive upper impact on the long-term level of per capita income (22% average increase every five-year) than domestic investment (0.5% average increase every five-year) . However, we have not registered positives productivity externalities in these countries, due to the presence of foreign business. Within a larger sample this time, including as well developed countries, developing countries and African countries, we found that FDI becomes significant for the process of technological catching-up, by productivity externalities when the ratio of total factor productivity in the host country compared to the United States is greater than or equal to 0.47. So to get the most from the presence of multinationals in their territory, African countries must first establish, good political, economic and social conditions, enabling them to improve their absorptive capacity (reasonable productivity gap vis -à-vis the United States).
Argentina received large amounts of FDI inflows during the 90s, in a scenario of deep structural reforms which forced domestic firms to rapidly undertake restructuring processes to adapt to the new economic and institutional environment. This paper explores to what extent FDI helped or hindered those restructuring processes, analyzing whether positive (or negative) spillovers arose from the increasing presence of TNCs affiliates. We found that TNCs affiliates have higher productivity levels than domestic firms, but the latter, on average, did not receive positive but negative spillovers from the growing foreign presence in the local economy. However, we also found that domestic firms with high absorption capabilities were able to reap positive spillovers from TNCs presence, suggesting that those capabilities are key determinants of the possibilities of domestic firms in developing countries of benefiting from FDI inflows.
Die technologische Leistungsfähigkeit einer Volkswirtschaft hat einen bedeutenden Einfluss auf den Handel. Darüber hinaus spielt auch die Innovationsleistung des Auslandes eine wichtige Rolle. Der internationale Handel und Auslandsdirektinvestitionen (FDI) ermöglichen die Übertragung von Wissen und Innovation durch F&E-Spillover. In einer Querschnittanalyse für den Zeitraum 1990 bis 2008 werden die bilateralen Exportströme Deutschlands in die restlichen 31 OECD-Länder untersucht. Anhand eines erweiterten Gravitationsmodells wird analysiert, welchen Einfluss die Innovationsfähigkeit der Handelspartner und die Forschungsintensität von auslandischen Multinationalen Unternehmen (MNU) auf die deutschen Exporte ausüben. Die Ergebnisse bestätigen die aufgestellten Hypothesen, dass sowohl die Innovationsfähigkeit der Handelspartner als auch FDI einen signifikanten positiven Einfluss auf den Handel haben. Je innovativer die ausländischen MNU in Deutschland sind, umso höher sind die heimischen Exporte.
This paper examines the direct and indirect effect of firms own R&D on total factor productivity among Swedish manufacturing firms. The R&D efforts do not only stimulate innovation but also enhance firms' ability to assimilate outside knowledge. The paper assumes that the principal channel of transmission of new technology is through I/O relations. Econometric evidence suggests that in addition to a firm's own R&D expenditures, spillovers stemming from the imports of intermediates from abroad and follow the technology gap are important determinants of firms' productivity. The domestic R&D spillovers following the I/O links between industries seem to be of minor importance in this respect. Realising that a firm's productivity is not only caused by its own R&D and knowledge spillovers, the firm's absorptive capacity also contributes. This is very important particularly for assessing the effective contribution of spillovers from other firms. The effect of a firm's R&D is found to interact positively with knowledge spillovers generated within the own industry, as well as domestic and imported rents spillovers.∗
This paper exams roles of firms' characteristics, regional and industrial structures, clustering and knowledge spillovers in explaining firms' patenting behavior in Sweden and Finland. This paper takes a first step to incorporate an indicator of firms' sorting motives into the empirical investigation on relationships between innovation and agglomeration. Two research issues are assessed. First, firms with high-productivity by sorting into industrial clusters can benefit from agglomeration and thus improve their innovation capabilities. Secondly, conditional on firms' sorting motives, knowledge spillovers have positive influences on firms' patent productions. To advance upon existing studies in illuminating the distinctive "excess-zero" patent problem, two Zero-inflated count models are proposed to analyze a panel of 147 Swedish and Finnish firms over the period 2002-2005. Firm size, sorting motive, the intensity of cumulated research and development investment, regional human capital and industrial clustering are main attributes in raising firms' innovation output. This study also demonstrates that cross-cluster knowledge spillovers have positive impacts on the intensity of patenting, while the effects of local (within-cluster) knowledge spillovers vary by the industries investigated.
Relocation in developing countries of domestic activities is a central element of discussions in several EU countries. Indeed, the transfer of part of the production process to developing countries is often condemned by a part of the general public and policy makers as a threat for domestic employment. However, several recent contributions have shown that effects on home economies are often positive. Our paper contributes to this literature by examining effects of these outward investments on home economies. Based on a sample of French firms that turn multinational during the considered period, we compare their performances to the ones of domestic-oriented firms. Output, employment, factor productivity, value added and wages are retained as measures of performance. The analysis is carried out by using propensity score matching in order to build an appropriate counterfactual of national firms.
Purpose
The purpose of this paper is to examine the impact of outward foreign direct investment (FDI) on economic growth.
Design/methodology/approach
Two econometric approaches are used: cross‐country regressions for a sample of 50 countries and time‐series estimators for the USA.
Findings
Both approaches tell the same story: outward FDI is positively associated with growth. This finding is robust to several model specifications, potential outliers, and different estimation techniques. In addition, Granger‐causality tests for the USA indicate that causality is bidirectional, suggesting that increased outward FDI is both a cause and a consequence of increased domestic output.
Originality/value
Previous studies have primarily examined the firm‐ and industry‐level effects of outward FDI – for example, on domestic investment, employment, and productivity. This paper, in contrast, deals with the effects of aggregate outward FDI on the economy as a whole.
This paper examines the dual effect of firm R&D efforts on productivity growth for Swedish manufacturing firms. The R&D efforts
do not only stimulate innovation but also enhance firms’ ability to identify, assimilate and exploit new knowledge from the
environment (Cohen and Levinthal. Economics Journal 99:569–596, 1989). In this paper, we assume that the principal channel of transmission of new knowledge is through I/O linkages. Our econometric
evidence suggests that in addition to the firm’s own R&D activities, R&D spillovers embodied in traded goods within the industry,
others imported from abroad, and technology spillovers transferred from the technological frontier within an industry are
important determinants of firms’ productivity growth. Results suggest that domestic R&D spillovers following the I/O links
between industries are of minor importance in this respect. We also analyze whether firms’ absorptive capacity matters for
productivity growth. Analyzing absorptive capacity is particularly important for assessing the effective contribution of spillovers
from other firms. The effect of a firm’s absorptive capacity is found to interact positively with imported R&D spillovers,
whereas domestic rents spillovers seem to play a minor role for productivity growth.
KeywordsTFP growth–R&D expenditures–absorptive capacity–R&D spillovers
In this paper we examine the impact of membership in Preferential Trade Agreements (PTAs) on trade between PTA members. Rather than considering the impact of PTA membership on the volume of trade we consider the impact of membership on the structure of trade. For a large sample of countries over the period 1962-2000 we find that membership in a PTA is associated with an increase in the extent of intra-industry trade. In addition, we find that the effect of PTA membership on IIT is larger when a PTA is formed between two developed countries.
Openness and Total Factor Productivity in Swedish Manufacturing, 1980–1995. — This paper studies the effect of openness on
total factor productivity (TFP) growth. Using industry-level data for Swedish manufacturing from 1980 to 1995, the paper shows
that integrated industries tend to be more engaged in R&D and have more entry and exit activity than other industries. The
results show that domestic R&D intensity does not contribute to the TFP growth rate. Instead, openness to international markets,
which helps facilitate technology spillovers, is an important factor. There is also some evidence that producers exiting the
market are less productive, implying that such exits will increase the average productivity of the industry.
This paper investigates empirically the importance of technological catch-up in explaining productivity growth in a sample of countries since the 1960s. New proxies for a country's absorptive capability--based on data for students studying abroad, telecommunications and publications--are tested in regression models. The results indicate that absorptive capability is a factor in explaining growth, with the most robust finding that countries with relatively high numbers of students studying science or engineering abroad experience faster subsequent growth. However, the paper also indicates that the significance of coefficients varies across specifications and samples, suggesting caution in focusing on individual results. Copyright 2004, Oxford University Press.
This paper investigates the association between total factor productivity growth and the R&D expenditures of Swedish manufacturing firms in the presence of domestic- and international R&D spillovers. The paper assumes that the principal channel of transmission of new technology is through I/O relations. Econometric evidence suggests that international as well as domestic inter-industry R&D spillovers are important determinants of firms’ productivity growth in the long run. The R&D spillovers generated within the industry and following I/O links seem to be of minor importance in explaining productivity growth. It seems likely that within-industry productivity spillovers follow other channels than I/O flows, such as horizontal spillovers through copying of new products and processes, or labour turnover. The use of a convergence parameter is one way to check for such within-industry technology flows. Our results indicate that a catch-up process exists by which the non-frontier firms in the Swedish manufacturing sector absorb knowledge spillovers from the leading firms in the industry. Finally, a firm’s own R&D efforts are found to be more or less positively correlated with the TFP growth, maybe the contribution from R&D efforts in some sense are underestimated. Copyright Springer Science + Business Media, LLC 2006
Based on a panel of data for Swedish manufacturing firms in 1990-2000, this paper
finds strong evidence for the existence of positive spillover effects from inward FDI.
The presence of foreign ownership in the same industry and region seems to enhance the total factor productivity of domestic firms. Moreover, the size of these FDI spillover effects seems to depend both on the nationality of the foreign MNF as well as on the absorptive capacity of the domestic firm, measured by its own R&D. It appears that this positive relationship between foreign presence and productivity cannot be explained as a consequence of reverse causality, i.e that FDI is attracted to highly productive regions and industries
It is nowadays generally accepted that inward foreign direct investment (FDI) is crucial as a source of technological spillovers. One of the objectives of this paper is to review the evidence on the quantity and quality of human capital employed by domestic and foreign firms. We examine whether spillovers accrue from MNE activity, and provide a preliminary understanding of why MNE spillovers remain somewhat ambiguous, particularly in developing countries, paying particular attention to human capital development.
Governments often promote inward foreign investment to encourage technology "spillovers" from foreign to domestic firms. Using panel data on Venezuelan plants, we find that foreign equity participation is positively correlated with plant productivity (the "own-plant" effect), but this relationship is only robust for small enterprises. We then test for spillovers from joint ventures to plants with no foreign investment. Foreign investment negatively affects the productivity of domestically owned plants. The net impact of foreign investment, taking into account these two offsetting effects, is quite small. The gains from foreign investment appear to be entirely captured by joint ventures.
Two models where productivity growth is caused by spillovers from R&D are analysed using a sample of nine manufacturing industries in six large OECD-countries between 1979 and 1991. The first model is based on traditional productivity analysis where growth in R&D stocks causes productivity growth. The second model is based on the endogenous growth literature where the level of R&D expenditures is assumed to increase productivity growth. The empirical results indicate stronger support for the latter model. The pattern of spillovers is also investigated. The results suggest that spillovers from R&D exist within industries, both nationally and internationally. There is, however, little evidence of spillovers between industries. The empirical evidence further suggests that intra-industry spillovers are confined to industries that are relatively R&D-intensive. Finally, direct foreign investment seem to facilitate the diffusion of R&D results, but we do not find any effect on growth from R&D embodied in intermediate products.
This paper analyzes three policy issues associated with foreign direct investment flows in the European Community. First, we find that recent FDI flows raise concerns that the technology of EC firms might be sourced by foreign competitors. Second, we analyze appropriate institutions to settle international conflicts in the control of foreign direct investment, in particular regarding foreign acquisitions. We conclude that if centralization is adequate to deal with external effects within the EC, an agreement on rules to allocate jurisdiction might suffice to deal with potential conflicts with third countries. Finally, we discuss the role of European competition policy in monitoring the intervention of member states towards FDI; we find that current subsidies to attract investment are not excessive in the presence of strong distortions in the labor market. Copyright 1993 by Oxford University Press.
It is apparent from the reported estimates that R&D is an important activity that has a major impact on the performing countries as well as on their trade partners. We may not yet have precise estimates of these impacts, both because of difficulties with available data and because of some unsettled methodological issues. But it is safe to draw a tentative conclusion, namely, that these effects are important and that there exist significant cross-country links that are driven by foreign trade and investments.
Coe and Helpman(1995) have measured the extent to which technology spills over between industrialized countries through the particular channel of trade flows. This paper re-examines two particular features of their study. First, we suggest that their functional form of how foreign R&D affects domestic productivity via imports is probably incorrect. We provide an alternative model which turns out to be more accurate, both theoretically and empirically. Second, we take into account two new potential channels of technology transfer: inward FDI and technology sourcing, as proxied by outward FDI. The empirical results show that outward FDI flows and imports flows are two simultaneous channels through which technology is internationally diffused. Inward FDI flows are not a significant channel of technology transfer. The hypothesis of technology sourcing associated with MNEs activities abroad is therefore confirmed while the widespread belief that inward FDI is a major channel of technology transfer is rejected.
Governments often promote inward foreign investment to encourage technology 'spillovers' from foreign to domestic firms. Using panel data on Venezuelan plants, the authors find that foreign equity participation is positively correlated with plant productivity (the 'own-plant' effect), but this relationship is only robust for small enterprises. They then test for spillovers from joint ventures to plants with no foreign investment. Foreign investment negatively affects the productivity of domestically owned plants. The net impact of foreign investment, taking into account these two offsetting effects, is quite small. The gains from foreign investment appear to be entirely captured by joint ventures.
A model is constructed in which multinational firms may arise endogenously. Multinationals exist in equilibrium when transport and tariff costs are high, incomes are high, and firm-level scale economies are important relative to plant-level scale economies. Less obvious, multinationals are more important in total economic activity when countries are more similar in incomes, relative factor endowments, and technologies. The model may thus be useful in explaining several stylized facts, including (a) the growing importance of direct investment relative to trade among the developed countries over time and (b) the greater ratio of investment to trade among the developed countries relative to this ratio for 'north-south' or 'south-south' economic relationships. The model offers predictions about the volume of trade that contrast with those of the 'new trade theory', predicting that trade at first rises and then falls as countries converge in incomes, relative endowments, and technologies. Welfare is also considered, and it is shown that direct investment makes the smaller (or high cost) country better off, but may make the larger (or low cost) country worse off.
Larger multinational firms commonly undertake R&D at home as well as in their foreign affiliates. However, MNFs still perform the major part of their R&D at home. This has been attributed to factors such as scale economies in R&D, the need of proximity to the company headquarters, and the desire to maintain strategic knowledge within firms (x7Caves, 1996, ).
It has long been recognized that, at the level of the firm, the decision to export and the decision to invest abroad are interrelated. They both concern different ways of supplying foreign markets. However, it was not until the mid 1980s that any attempts were made to incorporate FDI and multinational firms into general equilibrium trade models (e.g., Helpman, 1984, 1985; Markusen, 1984; Ethier, 1986). As was explained in , recent contributions in this area of research have stressed the interplay between proximity advantages and concentration advantages in determining whether firms choose to become multinationals or national exporting firms. If transport costs or other trade costs such as tariffs are high, the firm will have an incentive to locate production directly on the market where the good is sold. On the other hand, if there are strong scale economies at the level of the plant, the firm will have an incentive to concentrate production in a few sites, thus making it more likely that a foreign market will be supplied through exports (Brainard, 1993a; Markusen and Venables, 1996).
The main task of this paper is to discuss ways in which production financed by foreign direct investment, that is, that undertaken by multinational enterprises (MNEs), has affected our thinking about the international allocation of resources and the exchange of goods and services between countries. The analysis takes, as its starting point, the growing convergence between the theories of international trade and production, and argues the case for an integrated approach to international economic involvement, based both on the location-specific endowments of countries and the ownership-specific endowments of enterprises. In pursuing this approach, the paper sets out a systemic explanation of the foreign activities of enterprises, in terms of their ability to internalise markets to their advantage. It concludes with a brief examination of some of the effects which the MNE is allegedly having on the spatial allocation of resources, and on the patterns of trade between countries.
Traducción de: Communication of Innovations. A Cross-Cultural Approach
ABSTRACT A widely entertained hypothesis holds that, in comparisons
among countries, productivity growth rates tend to vary inversely
with productivity levels. A century of experience in a group of presently
industrialized countries supports this hypothesis and the convergence
of productivity levels it implies. The rate of convergence, however,
varied from period to period and showed marked strength only during
the first quarter-century following World War II. The general process
of convergence was also accompanied by dramatic shifts in countries'
productivity rankings. The paper extends the simple catch-up hypothesis
to rationalize the fluctuating strength of the process and explores
the connections between convergence itself and the relative success
of early leaders and latecomers.
This paper presents an econometric analysis of foreign direct investment flows in the four large countries of the EC, at the sectoral level and for the period 1984-89. We find that technological sourcing might be an important motive behind investment flows originating in the US and Japan but not behind intra-EC flows. Besides, we observe that “tariff jumping” may be an additional motivation behind Japanese and US investments and that all investments flows responded positively to the prospective of the internal market.
We analyze a model where a multinational firm can use a superior technology in a foreign subsidiary only after training a local worker. Technological spillovers from foreign direct investment arise when this worker is later hired by a local firm. Pecuniary spillovers arise when the foreign affiliate pays the trained worker a higher wage to prevent her from moving to a local competitor. We study conditions under which these spillovers occur. We also show that the multinational firm might find it optimal to export instead of investing abroad to avoid dissipation of its intangible assets or the payment of a higher wage to the trained worker.
This article examines the effect of relative technological capabilities on Japanese direct investment into the United States by looking simultaneously at industry conditions in the two markets. A negative binomial regression model is specified to estimate the effects of R & D capability and industry structure on a count measure of Japanese entries across 297 industries. The results indicate that Japanese direct investment in the United States is drawn to industries intensive in R & D expenditures summed across both countries; voluntary restraints on Japanese exports encourage direct investment. When the entries are disaggregated by mode (e.g., new plant or acquisition), there is a significant indication that joint ventures are used for the sourcing and sharing of U.S. technological capabilities. Copyright 1991 by MIT Press.
This article outlines the production function approach to the estimation of the returns to R&D and then proceeds to discuss in turn two very difficult problems: the measurement of output in R&D intensive industries and the definition and measurement of the stock R&D "capital." The latter concept leads to a discussion of modeling of the spillover effects of R&D and to suggestions for possible measurement of such effects via the concept of technological distance between firms and industries. Somewhat more familiar econometric problems (multicollinearity and simultaneity) are taken up in the next section and another section is devoted to estimation and inference problems arising more specifically in the R&D context. Several recent studies of returns to R&D are then surveyed, and the paper concludes with a plea for a lowering of expectations as to what the available data can tell us and with suggestions for ways of expanding the current data base in this field.
This paper presents a model of brain drain which emphasizes scale economies in advanced education. The author demonstrates that brain drain raises the education and income levels of a host country. However, contrary to the presumption that brain drain hurts the unskilled individuals left in a source country, the author argues that it is actually those professionals possessing intermediate-level abilities who are hurt by brain drain, regardless of whether they choose to stay or emigrate. The author also shows that conventional policies designed to stop brain drain may succeed only in retaining those who are mediocre professionals while the brightest continue to emigrate. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
We develop a Ricardian model to explore the role of trade in spreading the benefits of innovation.
This paper examines spillover effects of the activities of multinational firms. Such effects are most likely to be found in host countries, where the operations of foreign multinationals may influence local firms in the MNCs own industry as well as firms in other industries. However, there is no comprehensive evidence on the exact nature or magnitude of these effects, although it is suggested that host country spillovers vary systematically between countries and industries. In particular, the positive effects of foreign investment are likely to increase with the level of local capability and competition. The spillovers to the home countries of MNCs are often more difficult to identify, for various reasons. Earlier studies suggest that the effects are generally positive, but the increasing international division of labor within multinationals complicates the analysis. The impact on the home country is likely to depend on what activities these firms concentrate at home. Copyright 1998 by Blackwell Publishers Ltd
In this paper, I analyze recent findings by Coe and Helpman (1995) on trade-related international R+D spillovers. A Monte-Carlo-based robustness test is proposed which compares the elasticity of domestic productivity with respect to foreign R+D estimated by Coe and Helpman with an elasticity which is based on counterfactual international trade patterns. It is shown that also these, randomly created trade patterns give rise to positive international R+D spillover estimates, which are often larger, and explain more of the variation in productivity across countries than if 'true' bilateral trade patterns are employed. The finding casts doubt on the claim that patterns of international trade are important in driving R+D spillovers.
The following sections are included:IntroductionTechnology Transfer and the Production of KnowledgeThe SampleDefinition of Technology Transfer CostsTransfer Costs: Data and HypothesesThe Level of Transfer CostsTechnology/Transferor CharacteristicsTransferee and Host Country CharacteristicsDeterminants of the Cost of International Technology Transfer: Tests and ResultsThe ModelStatistical Tests: Phase IStatistical Tests: Phase IIDefferences between International and Domestic Technology TransferConclusion
References
Comparative data for ninety-three countries are used to analyze the robustness of the relationship between openness and total factor productivity growth. Nine indexes of trade policy are used to investigate whether the evidence supports the view that total factor productivity growth is faster in more open economies. The results are robust to the use of openness indicator, estimation technique, time period, and functional form and suggest that more open countries experienced faster productivity growth. Although the use of instrumental variables help dealing with endogeneity, issues related to causality remain somewhat open and require time series analyses to be adequately addressed.
R&D spillovers are, potentially, a major source of endogenous growth in various recent "new growth theory" models. This paper reviews the basic model of R&D spillovers and then focuses on the empirical evidence for their existence and magnitude. It surveys the older empirical literature with special attention to the economic difficulties of actually coming up with convincing evidence on this topic. Taken individually, many of the studies are flawed and subject to a variety of reservations, but the overall impression remains that R&D spillovers are both prevalent and important. Copyright 1992 by The editors of the Scandinavian Journal of Economics.
US Inward FDI and Relative Wages
- B Blonigen
- M Slaughter
Blonigen, B. and M. Slaughter (1999), "US Inward FDI and Relative
Wages", presented at the Western Economic Association International
Conference (San Diego).
Issues in Assessing the Contribution of Research and Development to Productivity Growth
- Z Grilliches
Grilliches, Z. (1979), "Issues in Assessing the Contribution of Research
and Development to Productivity Growth", The Bell Journal of Economics 10: 92-116.
The Performance of Foreign A¢liates in OECD Countries
OECD (1994), The Performance of Foreign A¢liates in OECD Countries, Paris: OECD.
Technological Capabilities and Japanese Foreign Direct Investment in the United States
- B Kogut
- S J Chang
Kogut, B. and S. J. Chang (1991), "Technological Capabilities and
Japanese Foreign Direct Investment in the United States", The Review
of Economics and Statistics 73: 401-413.
- D T Coe
- E Helpman
Coe, D. T. and E. Helpman (1995), "International R&D Spillovers",
European Economic Review 39: 859-887.