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Productivity Spillovers from Competition between Local Firms and Foreign Affiliates

In: Foreign Direct Investment

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  • Magnus Blomström
  • Ari Kokko
  • Mario Zejan

Abstract

In the debate on the role of multinational corporations in international technology transfer, it has often been suggested that a large share of the host countries’ benefits from foreign direct investment may come in the form of external effects or ‘spillovers’. MNCs may, for example, introduce new technologies that are imitated by local producers, or train workers whose specific skills spill over when they set up their own firms or are hired by existing local firms. These benefits can be characterized as effects of contagion and demonstration. Other effects are related to competition, and occur when local firms are forced to become more productive — by introducing new technologies or increasing X-efficiency — in order to survive in markets where foreign affiliates are present.

Suggested Citation

  • Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Productivity Spillovers from Competition between Local Firms and Foreign Affiliates," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 12, pages 187-202, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-0-230-59861-4_12
    DOI: 10.1057/9780230598614_12
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    References listed on IDEAS

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