Driffield, Nigel L. and Love, James H. (2006) Does the motivation for foreign direct investment affect productivity spillovers to the domestic sector? Applied Economics Quarterly, Volume 52 (Number 1). pp. 3-28.

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Abstract

There is increasing empirical and theoretical evidence that foreign direct investment (FDI) may be motivated not by the desire to exploit some competitive advantage possessed by multinationals, but to access the technology of host economy firms. Using a panel of FDI flows across OECD countries and manufacturing sectors between 1984 and 1995, we test whether these contrasting motivations influence the effects that FDI has on domestic total factor productivity. The distinction between technology-exploiting FDI (TEFDI) and technology-sourcing FDI (TSFDI) is made using R&D intensity differentials between host and source sectors. The hypothesis that the motivation for FDI has an effect on total factor productivity spillovers is supported: TEFDI has a net positive effect, while TSFDI has a net negative effect. These net effects are explained in terms of the offsetting influences of productivity spillovers and market stealing effects induced by incoming multinationals.

Item Type:	Journal Article
Divisions:	Faculty of Social Sciences > Warwick Business School > Strategy & International Business Faculty of Social Sciences > Warwick Business School
Journal or Publication Title:	Applied Economics Quarterly
Publisher:	Duncker und Humblot GmbH
ISSN:	1611-6607
Official Date:	2006
Dates:	Date Event 2006 Published
Volume:	Volume 52
Number:	Number 1
Page Range:	pp. 3-28
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

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