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Foreign Direct Investment, Technology Diffusion, and Host Country Productivity Growth

Author

Listed:
  • Lee, Hongshik

    (Korea University)

  • Lee, Joonhyung

    (Southern Methodist University)

  • Kim, Hyuk-hwang

    (Korea Institute for International Economic Policy (KIEP))

Abstract

The principal objective of this paper is to ascertain whether foreign direct investment (FDI) has statistically significant effects on host countries’ economic performance, such as total factor productivity. Such effects are often referred to as FDI externalities or spillover effects. This paper attempts to evaluate whether these spillover effects depend on the sending countries’ income levels. Our empirical analysis shows that FDI exerts positive impacts on less developed countries. Further, we determine that the impacts of FDI from developed countries are more prevalent. So-called North–South effects were confirmed; however, we do not detect South–South effects. We also investigated the other channel, imports, and demonstrate its significant impacts on total factor productivity.

Suggested Citation

  • Lee, Hongshik & Lee, Joonhyung & Kim, Hyuk-hwang, 2011. "Foreign Direct Investment, Technology Diffusion, and Host Country Productivity Growth," ADB Economics Working Paper Series 272, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0272
    Note: http://www.adb.org/sites/default/files/Economics-WP272.pdf
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    Cited by:

    1. Thi Thuy Hang Le & Van Chien Nguyen & Thi Hang Nga Phan, 2022. "Foreign Direct Investment, Environmental Pollution and Economic Growth—An Insight from Non-Linear ARDL Co-Integration Approach," Sustainability, MDPI, vol. 14(13), pages 1-14, July.
    2. Weiwei Liu & Xiandong Xu & Zhile Yang & Jianyu Zhao & Jing Xing, 2016. "Impacts of FDI Renewable Energy Technology Spillover on China’s Energy Industry Performance," Sustainability, MDPI, vol. 8(9), pages 1-16, August.
    3. Jeannine Bailliu & Mark Kruger & Argyn Toktamyssov & Wheaton Welbourn, 2016. "How Fast Can China Grow? The Middle Kingdom’s Prospects to 2030," Staff Working Papers 16-15, Bank of Canada.

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