FDI, Technology Spillovers, and Wages

Dieter Urban

Review of International Economics, 2010, vol. 18, issue 3, 443-453

Abstract: This study distinguishes multinational firm (MNE) technology‐spillover from learning effects. Whenever learning takes time, the model predicts that foreign investors deduct the economic value of learning from wages of inexperienced workers and add it to experienced ones to prevent them from moving to local competitors. Hence, the national wage bill is unaffected by the presence of MNEs. In contrast to learning, technology spillover effects occur whenever a worker with MNE experience contributes more to local firms' than to MNEs' productivity. In this case, experienced MNE workers are hired by indigenous firms and the host country obtains a welfare gain from the presence of MNEs.

Date: 2010
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https://doi.org/10.1111/j.1467-9396.2010.00909.x

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Working Paper: FDI Technology Spillovers and Wages (2007)
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