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Technology Spillovers through Foreign Direct Investment

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  • Yuko Kinoshita

Abstract

I study the effects of technology spillovers ("catch-up") and a firm's investment in skills (training) on the firm's productivity when FDI (foreign direct investment) is a carrier of new technology. Using a 1992 firm-level survey data in China, I test the investment equation proposed by Parente and Prescott (JPE, April 1994). I find: (1) The catch-up effect and a firm's training both significantly raise a firm's TFP (total factor productivity) growth, just as Parente and Prescott hypothesized, (2) Chinese local firms are more likely to train skilled workers than foreign firms, which accelerated technology spillovers they received from foreign firms, (3) Foreign joint ventures did not significantly raise local firms' TFP growth, (4) Foreign-owned firms in China are unlikely to train local workers. Instead, they import intermediate inputs from their home countries.

Suggested Citation

  • Yuko Kinoshita, 1999. "Technology Spillovers through Foreign Direct Investment," William Davidson Institute Working Papers Series 221, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:1999-221
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39607/3/wp221.pdf
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    Cited by:

    1. Kinoshita, Yuko, 2001. "R&D and Technology Spillovers through FDI: Innovation and Absorptive Capacity," CEPR Discussion Papers 2775, C.E.P.R. Discussion Papers.
    2. Daniel Chudnovsky & Andres Lopez & Gaston Rossi, 2008. "Foreign Direct Investment Spillovers and the Absorptive Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992-2001)," Journal of Development Studies, Taylor & Francis Journals, vol. 44(5), pages 645-677.
    3. Yuko Kinoshita, 2000. "R&D and technology spillovers via FDI: Innovation and absorptive capacity," CERGE-EI Working Papers wp163, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    4. Erol Taymaz & Aykut Lenger, 2004. "Multinational Corporations as a Vehicle for Productivity Spillovers in Turkey," DRUID Working Papers 04-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    5. Alberto GABRIELE, 2001. "Science And Technology Policies, Industrial Reform And Technical Progress In China. Can Socialist Property Rights Be Compatible With Technological Catching Up?," UNCTAD Discussion Papers 155, United Nations Conference on Trade and Development.
    6. Yi Zhang, 2019. "Institutions, Firm Characteristics, and FDI Spillovers," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(5), pages 1109-1136, April.

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