Technology Spillovers through Foreign Direct Investment

CERGE-EI Working Paper Series No. 139

38 Pages Posted: 17 Jan 2010

See all articles by Yuko Kinoshita

Yuko Kinoshita

International Monetary Fund (IMF); University of Michigan, William Davidson Institute; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 1998

Abstract

I study the effects of technology spillovers (“catch-up”) and a firm's investment in skills (training) on the firm's productivity when FDI (foreign direct investment) is a carrier of new technology. Using 1992 firm-level survey data in China, I test the investment equation proposed by Parente and Prescott (JPE, April 1994). I find:

1. The catch-up effect and a firm's training both significantly raise a firm's TFP (total factor productivity) growth, just as Parente and Prescott hypothesized, 2. Chinese local firms are more likely to train skilled workers than foreign firms, which accelerated technology spillovers they received from foreign firms, 3. Foreign joint ventures did not significantly raise local firms' TFP growth, 4. Foreign-owned firms in China are unlikely to train local workers. Instead, they import intermediate inputs from their home countries.

Suggested Citation

Kinoshita, Yuko, Technology Spillovers through Foreign Direct Investment (December 1, 1998). CERGE-EI Working Paper Series No. 139, Available at SSRN: https://ssrn.com/abstract=1537049 or http://dx.doi.org/10.2139/ssrn.1537049

Yuko Kinoshita (Contact Author)

International Monetary Fund (IMF) ( email )

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University of Michigan, William Davidson Institute

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Centre for Economic Policy Research (CEPR)

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