Foreign direct investment and the nature of R&D Academic Article uri icon

abstract

  • We find that the role FDI plays in international technology transfer (ITT) hinges on whether substitute channels of ITT - such as imitation - exist for the host country. If FDI is the sole channel of ITT, a faster flow of FDI to the South increases the rates of innovation, imitation, and ITT, so FDI generates dynamic benefits. If FDI and imitation coexist as channels of ITT, however, then FDI merely substitutes for imitation targeting Northern firms. A faster flow of FDI to the South then leaves the rates of innovation, imitation, and ITT essentially unaffected, so FDI generates mostly static benefits. JEL Classification: F21, F43.

published proceedings

  • CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE

author list (cited authors)

  • Glass, A. J., & Saggi, K.

citation count

  • 27

complete list of authors

  • Glass, AJ||Saggi, K

publication date

  • January 1999

publisher