Technology Spillovers through Foreign Direct Investment
AbstractI 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.
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Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 221.
Date of creation: 01 Jan 1999
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This paper has been announced in the following NEP Reports:
- NEP-CWA-2001-12-04 (Central & Western Asia)
- NEP-IFN-2001-12-19 (International Finance)
- NEP-SEA-2001-11-27 (South East Asia)
- NEP-TID-2001-12-19 (Technology & Industrial Dynamics)
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