Foreign subsidiaries as channel of international technology diffusion. Some direct firm level evidence from Belgium

The use of FDI as a channel of international spillovers is by now fairly established in the empirical literature on innovation and growth. It is often argued that subsidiaries of foreign MNEs are a mechanism through which technological know-how flows across borders. For foreign subsidiaries to be channels of international spillovers, these subsidiaries need to source know-how internationally and at the same time transfer their know-how to the local economy. Using direct firm level evidence from Belgian CIS-survey data on the occurrence of technology transfers, we find that foreign subsidiaries are indeed more likely to acquire technology internationally. But once controlled for the superior access to the international technology market that foreign subsidiaries enjoy, we find that these firms are not more likely to transfer technology to the local economy. This suggests that foreign subsidiaries are not necessarily interesting sources for local transfers. What seems to be important for local technology transfers is having an international network that provides access to international technology