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Efficiency externalities of trade and alternative forms of foreign investment in OECD countries

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  • Krishna G. Iyer

    (Department of Applied and International Economics, Massey University, Palmerston North, New Zealand)

  • Alicia N. Rambaldi

    (School of Economics, Centre for Efficiency and Productivity Analysis, University of Queensland, Brisbane, Australia)

  • Kam Ki Tang

    (School of Economics, Centre for Efficiency and Productivity Analysis, University of Queensland, Brisbane, Australia)

Abstract

The literature on the spillover effects of trade and inflows of foreign direct investment (FDI) has concentrated on technological externalities. Little effort has been directed towards identifying their efficiency externalities. This paper measures the efficiency externalities of trade and various forms of foreign investment for a sample of 20 OECD countries between 1982 and 2000 using a stochastic frontier approach. Trade and all foreign investment inflows are found to enhance efficiency, whereas outflows of FDI are found to exacerbate inefficiency. The efficiency externalities from foreign investment are contingent on the absorptive capacity of the host economies. Copyright © 2008 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 23 (2008)
Issue (Month): 6 ()
Pages: 749-766

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Handle: RePEc:jae:japmet:v:23:y:2008:i:6:p:749-766

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Cited by:
  1. Zhou, Xianbo & Li, Kui-Wai & Li, Qin, 2011. "An analysis on technical efficiency in post-reform China," China Economic Review, Elsevier, vol. 22(3), pages 357-372, September.
  2. Mastromarco Camilla & Laura Serlenga & Yongcheol Shin, 2013. "Globalisation and technological convergence in the EU," Journal of Productivity Analysis, Springer, vol. 40(1), pages 15-29, August.
  3. repec:clg:wpaper:2013-15 is not listed on IDEAS
  4. Miljkovic, Dragan & Shaik, Saleem, 2010. "The Impact of Trade Openness on Technical Efficiency in U.S. Agriculture," Agribusiness & Applied Economics Report 95749, North Dakota State University, Department of Agribusiness and Applied Economics.
  5. Filippetti, Andrea & Payrache, Antonio, 2010. "Productivity growth and catch up in Europe: A new perspective on total factor productivity differences," MPRA Paper 27212, University Library of Munich, Germany.

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