Journal Article

Trade, Foreign Direct Investment, and International Technology Transfer: A Survey

Kamal Saggi

in The World Bank Research Observer

Published on behalf of World Bank

Volume 17, issue 2, pages 191-235
Published in print September 2002 | ISSN: 0257-3032
Published online September 2002 | e-ISSN: 1564-6971 | DOI: http://dx.doi.org/10.1093/wbro/17.2.191
Trade, Foreign Direct Investment, and International Technology Transfer: A Survey

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What role does trade play in international technology transfer? Do technologies introduced by multinational firms diffuse to local firms? What kinds of policies have proved successful in encouraging technology absorption from abroad and why? Using these questions as motivation, this article surveys the recent trade literature on international technology transfer, paying particular attention to the role of foreign direct investment. The literature argues that trade necessarily encourages growth only if knowledge spillovers are international in scope. Empirical evidence on the scope of knowledge spillovers (national versus international) is ambiguous. Several recent empirical plant‐level studies have questioned earlier studies that argued that foreign direct investment has a positive impact on the productivity of local firms. Yet at the aggregate level, evidence supports the view that foreign direct investment has a positive effect on economic growth in the host country.

Journal Article.  0 words. 

Subjects: Development Planning and Policy

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