This study further examines the role of research and development (R&D), both domestic and foreign, in the development of national productivity. A key focus is on the role played by foreign direct investment (FDI) in facilitating technological transfer. The research empirically investigates the significance of FDI as an effective channel of R&D spillovers within a group of 15 OECD countries. It also examines whether the technology transfer through FDI is bi-directional: from an investing country to a host country and vice versa. In addition, the impact of human capital accumulation on a country’s capacity to learn from a foreign technology base is also examined empirically. The paper considers the possible effects of FDI on human capital accumulation process, in particular, whether FDI helps channel more resources towards the promotion of education activities. Empirical results obtained all lend strong supports to these hypotheses.
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Paper provided by School of Economics, University of Queensland, Australia in its series MRG Discussion Paper Series with number
1507.