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Foreign direct investment and spillovers through workers' mobility

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  • Fosfuri, Andrea
  • Motta, Massimo
  • Ronde, Thomas

Abstract

We analyze a model where a multinational firm can use its superior technology in a foreign subsidiary only after appropriate training of local managers. Technological spillovers from foreign direct investment arise when such managers are later hired by a local firm. Benefits for the host economy may also take the form of the rent that trained managers receive by the foreign affiliate to prevent them from moving to local competitors. We study conditions under which technological spillovers occur. We also show that under certain circumstances the multinational firm might find it optimal to resort to export instead of foreign direct investment, to avoid dissipation of its intangible assets.
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Suggested Citation

  • Fosfuri, Andrea & Motta, Massimo & Ronde, Thomas, 2001. "Foreign direct investment and spillovers through workers' mobility," Journal of International Economics, Elsevier, vol. 53(1), pages 205-222, February.
  • Handle: RePEc:eee:inecon:v:53:y:2001:i:1:p:205-222
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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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