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Measuring Efficiency externalities from Trade and Alternative Forms of Foreign Investment

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Abstract

The literature has concentrated on evaluating technological spillovers from trade and inflows of foreign direct investment (FDI). Little effort has been directed towards identifying efficiency externalities arising from international linkages. We evaluate these for a sample of 20 OECD countries between 1982 and 2000 using a stochastic frontier approach. The analysis includes trade, inflows and outflows of FDI, foreign portfolio investment (FPI), and other foreign investment (OFI), and a measure of the absorptive capacities of host economies. We find trade and all foreign investment inflows to lead to increased efficiency. Outflows of FDI are found to exacerbate inefficiency.

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  • Krishna G. Iyer & Alicia N. Rambaldi & Kam Ki Tang, 2005. "Measuring Efficiency externalities from Trade and Alternative Forms of Foreign Investment," CEPA Working Papers Series WP042005, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:16
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    2. Imed Drine & Mahmoud Sami Nabi & Mohamed Safouane Ben Aissa, 2013. "Financial Openness and Technology Catch-up," Review of Market Integration, India Development Foundation, vol. 5(1), pages 43-69, April.

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