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Foreign Direct Investment, Technology Sourcing and Reverse Spillovers

Foreign Direct Investment, Technology Sourcing and Reverse Spillovers Recent theoretical work points to the possibility of foreign direct investment motivated not by ‘ownership’ advantages which may be exploited by a multinational enterprise but by the desire to access the superior technology of a host nation through direct investment. To be successful, technology sourcing foreign direct investment hinges crucially on the existence of domestic‐to‐foreign technological externalities within the host country. We test empirically for the existence of such ‘reverse spillover’ effects for a panel of UK manufacturing industries. The results demonstrate that technology generated by the domestic sector spills over to foreign multinational enterprises, but that this effect is restricted to relatively research and development intensive sectors. There is also evidence that these spillover effects are affected by the spatial concentration of industry, and that learning‐by‐doing effects are restricted to sectors in which technology sourcing is unlikely to be a motivating influence. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Manchester School Wiley

Foreign Direct Investment, Technology Sourcing and Reverse Spillovers

Driffield, Nigel; Love, James H.
The Manchester School , Volume 71 (6) – Jan 1, 2003
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References (37)

Publisher
Wiley
Copyright
Copyright © 2003 Wiley Subscription Services
ISSN
1463-6786
eISSN
1467-9957
DOI
10.1046/j.1467-9957.2003.00372.x
Publisher site
See Article on Publisher Site

Abstract

Recent theoretical work points to the possibility of foreign direct investment motivated not by ‘ownership’ advantages which may be exploited by a multinational enterprise but by the desire to access the superior technology of a host nation through direct investment. To be successful, technology sourcing foreign direct investment hinges crucially on the existence of domestic‐to‐foreign technological externalities within the host country. We test empirically for the existence of such ‘reverse spillover’ effects for a panel of UK manufacturing industries. The results demonstrate that technology generated by the domestic sector spills over to foreign multinational enterprises, but that this effect is restricted to relatively research and development intensive sectors. There is also evidence that these spillover effects are affected by the spatial concentration of industry, and that learning‐by‐doing effects are restricted to sectors in which technology sourcing is unlikely to be a motivating influence.

Journal

The Manchester School – Wiley

Published: Jan 1, 2003

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