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Technological Spillovers and Export-platform FDI

In: Multinationals and Foreign Investment in Economic Development

Author

Listed:
  • Kjetil Bjorvatn

    (Norwegian School of Economics and Business Administration)

  • Carsten Eckel

    (University of Göttingen)

Abstract

The literature on foreign direct investment (FDI) suggests that technological spillovers from multinational firms to local firms are, at least potentially, significant (Blomström and Kokko, 1998). Typical channels for spillovers associated with the activities of multinational enterprises (MNEs) include backward and forward linkages between foreign affiliates and local firms, demonstration effects, and labour turnover in the host country. Audretsch and Feldman (1996), Bransetter (2001) and Keller (2001) report that such spillovers are primarily local in nature — that is, intranational, rather than international. Hence, technological spillovers can affect a firm’s mode of entry into a foreign market. Analyses of entry choice in the presence of spillovers include Ethier (1984), Ethier and Markusen (1996), Siotis (1999), Fosfuri (2000), Fosfuri, Motta and Ronde (2001) and Markusen (2001). One insight from the existing literature is that spillovers reduce the incentive for technological leaders to invest in foreign markets. Typically, the literature suggests that, in order to limit spillovers, the MNE may be more inclined to choose exports or perhaps to expose its foreign competitors to a less advanced version of the MNE’s technology.

Suggested Citation

  • Kjetil Bjorvatn & Carsten Eckel, 2005. "Technological Spillovers and Export-platform FDI," International Economic Association Series, in: Edward M. Graham (ed.), Multinationals and Foreign Investment in Economic Development, chapter 4, pages 85-93, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-0-230-52295-4_4
    DOI: 10.1057/9780230522954_4
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    Cited by:

    1. Sanjo, Yasuo, 2015. "The role of firm ownership in policy competition for foreign direct investment between asymmetric countries," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 110-121.
    2. Sarker, Bibhuti & Serieux, John, 2023. "Multilevel determinants of FDI: A regional comparative analysis," Economic Systems, Elsevier, vol. 47(3).
    3. Jindra, Björn & Giroud, Axèle & Scott-Kennel, Joanna, 2009. "Subsidiary roles, vertical linkages and economic development: Lessons from transition economies," Journal of World Business, Elsevier, vol. 44(2), pages 167-179, April.
    4. Bjorvatn, Kjetil & Eckel, Carsten, 2006. "Policy competition for foreign direct investment between asymmetric countries," European Economic Review, Elsevier, vol. 50(7), pages 1891-1907, October.
    5. Sanjo, Yasuo, 2012. "Country risk, country size, and tax competition for foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 292-301.

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