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Knowledge Spillovers Through FDI and Trade: The Moderating Role of Quality-Adjusted Human Capital

In: Foundations of Economic Change

Author

Listed:
  • Muhammad Ali

    (Friedrich Schiller University Jena)

  • Uwe Cantner

    (Friedrich Schiller University Jena
    University of Southern Denmark)

  • Ipsita Roy

    (Friedrich Schiller University Jena)

Abstract

The paper extends the findings of the Coe and Helpman (Eur Econ Rev 39(5):859–887, 1995) model of R&D spillovers by considering foreign direct investment (FDI) as a channel for knowledge spillovers in addition to imports. Deeper insights on the issue are provided by examining the inter-relationship between knowledge spillovers from imports and inward FDI. Furthermore, human capital is added to the discussion as one of the appropriability factors for knowledge spillovers, with special focus on its quality-content, using journal publications and patent applications. Applying cointegration estimation method on 20 European countries from 1995 to 2010, the direct effects of FDI-related as well as import-related spillovers on domestic productivity are confirmed. Furthermore, a strong complementary relationship is found between knowledge spillovers through the channels of imports and inward FDI. When considering quality-adjusted human capital, countries with better human capital are found to benefit not only from direct productivity effects, but also from absorption and transmission of international knowledge spillovers through imports and inward FDI. Finally, technological distance with the frontier does not appear to play a role in the absorption of import and FDI related knowledge spillovers.

Suggested Citation

  • Muhammad Ali & Uwe Cantner & Ipsita Roy, 2017. "Knowledge Spillovers Through FDI and Trade: The Moderating Role of Quality-Adjusted Human Capital," Economic Complexity and Evolution, in: Andreas Pyka & Uwe Cantner (ed.), Foundations of Economic Change, pages 357-391, Springer.
    • Handle: RePEc:spr:eccchp:978-3-319-62009-1_16
    DOI: 10.1007/978-3-319-62009-1_16
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    Cited by:

    1. Uwe Cantner & Martin Kalthaus & Matthias Menter & Pierre Mohnen, 2023. "Global knowledge flows: characteristics, determinants, and impacts," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(5), pages 1063-1076.
    2. Juntao Du & Ziyi Zhang & Xueli Chen & Huihui Ding & Ning Zhang & Malin Song, 2024. "Revitalizing industrial structure: Unleashing the potential of energy technology innovation," Journal of Evolutionary Economics, Springer, vol. 34(4), pages 783-809, December.
    3. Bernhard Dachs & Robert Stehrer & Anna Wolfmayr, 2025. "Global value chains, technology sovereignty and the role of China in international knowledge diffusion," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 52(3), pages 753-773, September.
    4. Hafiz M. Sohail & Mir Zatullah & Zengfu Li, 2021. "Effect of Foreign Direct Investment on Bilateral Trade: Experience From Asian Emerging Economies," SAGE Open, , vol. 11(4), pages 21582440211, October.
    5. Muhammad Ali & Abiodun Egbetokun & Manzoor Hussain Memon, 2018. "Human Capital, Social Capabilities and Economic Growth," Economies, MDPI, vol. 6(1), pages 1-18, January.
    6. Holger Graf & Hoda Mohamed, 2025. "Beyond trading: knowledge spillovers and learning-by-exporting in global value chains," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 34(1), pages 144-170.
    7. Yue Jin & Chen Chen & Zhanyi Shi, 2021. "Spillover Effect of FDI on Food Exports: Based on Firm-Level Analysis in China," Sustainability, MDPI, vol. 13(9), pages 1-20, April.
    8. Hu, Gang-Gao, 2021. "Is knowledge spillover from human capital investment a catalyst for technological innovation? The curious case of fourth industrial revolution in BRICS economies," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    9. Gideon Ndubuisi & Solomon Owusu, 2023. "Trade for catch-up: examining how global value chains participation affects productive efficiency," Journal of Productivity Analysis, Springer, vol. 59(2), pages 195-215, April.
    10. Yang Gao & Sang-Bing Tsai & Xingqun Xue & Tingzhen Ren & Xiaomin Du & Quan Chen & Jiangtao Wang, 2018. "An Empirical Study on Green Innovation Efficiency in the Green Institutional Environment," Sustainability, MDPI, vol. 10(3), pages 1-13, March.
    11. Muhammad Ali, 2017. "Determinants of Related and Unrelated Export Diversification," Economies, MDPI, vol. 5(4), pages 1-21, December.
    12. Thi Bich Thuy Dao & Van Quy Khuc, 2023. "The Impact of Openness on Human Capital: A Study of Countries by the Level of Development," Economies, MDPI, vol. 11(7), pages 1-13, June.
    13. Pan, Xiongfeng & Li, Mengna & Wang, Mengyang & Chu, Junhui & Bo, Hongguang, 2020. "The effects of outward foreign direct investment and reverse technology spillover on China's carbon productivity," Energy Policy, Elsevier, vol. 145(C).
    14. Moralles, Herick Fernando & Moreno, Rosina, 2020. "FDI productivity spillovers and absorptive capacity in Brazilian firms: A threshold regression analysis," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 257-272.
    15. Ipsita Roy & Sourabh Bikas Paul, 2022. "Knowledge Spillovers and Productivity Growth: Role of Absorptive Capacity in the Indian Manufacturing Sector," Journal of Industry, Competition and Trade, Springer, vol. 22(2), pages 233-257, June.
    16. Elena I. Lazareva & Dmitry A. Shevchenko, 2023. "Human-Centered Reboot of Green Urban Ecosystem Management in the Context of Digitalization," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 56-66.
    17. Sarker, Bibhuti & Serieux, John, 2022. "Foreign-invested and domestic firm attributes and spillover effects: Evidence from Brazil," Journal of Multinational Financial Management, Elsevier, vol. 63(C).
    18. Vu, Duong Hoang & Jemberu, Etsub Tekola & Pavelková, Drahomíra, 2025. "The impact of the movement of labor between FDI and domestic firms on the labor productivity of domestic firms," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 373-386.
    19. Atif Rao & Muhammad Ali & Jason M Smith, 2024. "Foreign direct investment and domestic innovation: Roles of absorptive capacity, quality of regulations and property rights," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-15, March.
    20. Chang-Hwan Choi & Xuan Zhou & Jung-O Ko, 2023. "Can Human Capital Drive Sustainable International Trade? Evidence from BRICS Countries," Sustainability, MDPI, vol. 16(1), pages 1-11, December.

    More about this item

    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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