Reexamining foreign direct investment (FDI) as a potential channel for knowledge diffusion - based on industry data from seventeen OECD countries during the period 1973-2000 - we find that FDI-receiving countries benefit strongly from FDI-related knowledge spillovers. We do not find evidence for positive FDI-related technology sourcing effects. Instead, our results suggest that outward FDI might have negative effects on the output of the FDI-sending country.
In this book, Nagesh Kumar and expert contributors examine and explain the emerging patterns in international technology transfers and foreign direct investment flows (FDIs) over the past two decades. They analyse the trends in internationalization of corporate activity in individual source countries, discussing outflows from both major and emerging source countries. This departs from the existing treatments of FDI as homogenous resource and allows for a more detailed prediction of future outflow patterns. Throughout, the research focuses upon the implications of new trends for developing countries. Kumar concludes by outlining the policy implications for the governments of such countries seeking to mobilize technology and FDI for their industrialization and further integration into the international community. Controversially, he cautions against excessive optimism about the potential of FDI inflows as an agent of development. This book draws together much data and information which is not readily available and provides reflections upon international business negotiations from a developing country's perspective.
Abstract: May 2000 - How much a developing country can take advantage of technology transfer from foreign direct investment depends partly on how well educated and well trained its workforce is, how much it is willing to invest in research and development, and how much protection it offers for intellectual property rights. Saggi surveys the literature on trade and foreign direct investment - especially wholly owned subsidiaries of multinational firms and international joint ventures - as channels for technology transfer. He also discusses licensing and other arm's-length channels of technology transfer. He concludes: How trade encourages growth depends on whether knowledge spillover is national or international. Spillover is more likely to be national for developing countries than for industrial countries; Local policy often makes pure foreign direct investment infeasible, so foreign firms choose licensing or joint ventures. The jury is still out on whether licensing or joint ventures lead to more learning by local firms; Policies designed to attract foreign direct investment are proliferating. Several plant-level studies have failed to find positive spillover from foreign direct investment to firms competing directly with subsidiaries of multinationals. (However, these studies treat foreign direct investment as exogenous and assume spillover to be horizontal - when it may be vertical.) All such studies do find the subsidiaries of multinationals to be more productive than domestic firms, so foreign direct investment does result in host countries using resources more effectively; Absorptive capacity in the host country is essential for getting significant benefits from foreign direct investment. Without adequate human capital or investments in research and development, spillover fails to materialize; A country's policy on protection of intellectual property rights affects the type of industry it attracts. Firms for which such rights are crucial (such as pharmaceutical firms) are unlikely to invest directly in countries where such protections are weak, or will not invest in manufacturing and research and development activities. Policy on intellectual property rights also influences whether technology transfer comes through licensing, joint ventures, or the establishment of wholly owned subsidiaries. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to study microfoundations of international technology diffusion. The study was funded by the Bank's Research Support Budget under the research project Microfoundations of International Technology Diffusion. The author may be contacted at [email protected].
The importance of technology transfer for the competitive advantage of companies and the economic success of nations cannot be overstated. Technology is a determining element for firms and nations to increase productivity, to compete, and to prosper. In The Competitive Advantage of Regions and Nations, the authors stress that companies, investment promotion agencies, and government bodies cannot simply sit and wait until new technologies arrive in their domain. Rather, they need to manage the identification, assessment, attraction, absorption and application of new technologies. In this comprehensive book, Boris Ricken and George Malcotsis explain how technology transfer in Foreign Direct Investment (FDI) projects can be systematically managed. Using some 40 case studies as illustration, they give step-by-step guidance for managers. The explanation of theory in this book, together with the frameworks and cases delivering solutions to the various challenges of technology transfer will be highly appreciated by managers of companies, investment promotion agencies, and government bodies alike. It also offers students confronted with the topic an understandable study guide.
What role does trade play in international technology transfer? Do technologies introduced by multinational firms diffuse to local firms? What kinds of policies have proved successful in encouraging technology absorption from abroad and why? Using these questions as motivation, this article surveys the recent trade literature on international technology transfer, paying particular attention to the role of foreign direct investment. The literature argues that trade necessarily encourages growth only if knowledge spillovers are international in scope. Empirical evidence on the scope of knowledge spillovers (national versus international) is ambiguous. Several recent empirical plant-level studies have questioned earlier studies that argued that foreign direct investment has a positive impact on the productivity of local firms. Yet at the aggregate level, evidence supports the view that foreign direct investment has a positive effect on economic growth in the host country.
This collection of essays considers technology transfer from three critical aspects: how managers choose the kind of technology they transfer internationally; what channels they use under various circumstances to bring about these transfers; and how they manage the complexities of the process. -- Dust jacket.
Macro statistics on foreign direct investment (FDI) are blurred by offshore centers with enormous inward and outward investment positions. This paper uses several new data sources, both macro and micro, to estimate the global FDI network while disentangling real investment and phantom investment and allocating real investment to ultimate investor economies. We find that phantom investment into corporate shells with no substance and no real links to the local economy may account for almost 40 percent of global FDI. Ignoring phantom investment and allocating real investment to ultimate investors increases the explanatory power of standard gravity variables by around 25 percent.
Foreign subsidiaries of multinational companies are suggested as one of the main channels of technology transfer to less developed economies. In Central East Europe their presence proved to be a decisive factor to economic restructuring and development. This volume is a unique guide to theory, method of research, and empirical evidence, for technology transfer via foreign subsidiaries of multinational companies. It combines the merits of a core text on technology transfer via FDI with up-to-date empirical evidence.
The role of foreign direct investment (FDI) in international capital flows is examined. Theories of the determinants of FDI are surveyed, and the economic consequences of FDI for both host (recipient) and home (investor) nations are examined in light of empirical studies. Policy issues surrounding possible negotiation of a “multilateral agreement on investment” are discussed.
